Arbitration Complaint, Arbitration Discovery, Compliance, Customer Complaint, Enforcement, FINRA, Investor Complaint, Stockbroker, Strong Defense
In today’s environment an informal customer complaint must be taken as seriously as a formal filing with FINRA. Upon receipt, a swift and comprehensive investigation of the alleged wrongdoing should be commenced. Lay the groundwork for any third party’s review of your files. Whether it’s FINRA’s or claimant’s counsel reviewing your files, the firm should demonstrate that it takes the claims seriously and is/was working both with the broker and the customer to: (i) resolve the issue; and (ii) ensure the complaining acts to do not repeat themselves.
When the formal statement of claim does arrive from FINRA, the clock starts to run on the time to submit an answer and prepare for an upcoming arbitration hearing. FINRA is putting pressure on arbitrators to expedite the proceedings. The days of pushing back hearings a year and a half after the initial pre-hearing conference are a thing of the past.
Firms must be smart, and by doing so, they will save money and perhaps more importantly, avoid grief and liability. Upon receipt of a statement of claim, a full profit and loss should be completed. Provide your counsel with: (i) account statements; (ii) new account documents; (iii) client and broker files; and (iv) an analysis of net out-of-pocket losses and turnover rate. As knowledge is power, providing defense counsel this information will permit a comprehensive response to the claims. Additionally, the broker must have a “tell all” with counsel, explaining the relationship with the client, leaving no stone unturned. Let the attorney make the decision as to what is and what is not important to the case. Remember, prior to the arbitration hearing, two out of the three arbitrators will have no contact with the parties outside of the pleadings. The statement “you don’t get a second chance to make a first impression” lies true with the submission of the answer and you must give your attorney all the ammunition to submit a strong defense on your behalf.