How does FINRA investigate and adjudicate disputes?

FINRA (Financial Industry Regulatory Authority) is an independent, non-governmental organization that regulates the securities industry in the United States and investigates and adjudicates certain disputes between investors and brokers. In Kansas, when FINRA investigates and adjudicates a dispute, it follows an arbitration process. When FINRA receives a request for arbitration, it sets up a panel of three arbitrators, with each side of the dispute selecting their own panel member. Once the panel is established, the parties involved will submit documents to present their case to the panel. After reviewing the documents, the panel will schedule a hearing where the parties can make oral presentations to the arbitrators. After hearing both sides, the panel renders a decision, which is binding and legally enforceable. In addition to the arbitration process, FINRA also conducts investigations on its own. During an investigation, FINRA will review documents, interview witnesses, and examine evidence. If FINRA finds that an investor was wrongfully treated or acted upon by a broker, it can issue sanctions, such as fines or suspension of the broker’s license. By providing an alternative to court proceedings, FINRA has made the process of resolving disputes much faster and less costly for both parties. Although FINRA’s decisions are legally binding, either party may ask a court to review the decision, and the court may vacate, modify, or affirm the ruling.

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