What is the process of defending against a securities arbitration claim?

Defending against a securities arbitration claim in Texas follows a process mandated by the Financial Industry Regulatory Authority (FINRA). When a client believes that their broker or investment advisor has acted negligently or inappropriately, they may file a securities arbitration claim. The first step in defending a securities arbitration claim is to determine the applicable state and federal laws that apply to the dispute. Once this has been determined, the defendant should respond to the initial claim. Common defenses include demonstrating that the investor was adequately warned and educated about the risks of the investment, that the investment was suitable for the investor’s financial goals, that the advice rendered was based on the investor’s stated goals, or that the investor was not aware of the risks associated with the investment. Once a response has been filed with FINRA, the dispute will typically be heard before a panel of arbitrators appointed by FINRA. The panel will hear both sides of the dispute and will review all evidence offered by each party. At the conclusion of the hearing, the arbitrators will issue a decision, often called an "award". The decision of the arbitrators is binding and legally enforceable for both parties. If the investor prevails, the arbitrators may award them damages, which can include repayment of losses plus interest, legal fees, and other costs. If the broker or investment advisor prevails, the investor may be ordered to pay the broker’s legal costs. In either case, it is important to have a knowledgeable securities attorney to advise and assist in the defense.

What is the process of defending against a securities arbitration claim?

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