FINRA Regulatory Program

If an investor believes that a stockbroker has violated FINRA rules, a complaint may be filed with the Financial Industry Regulatory Authority (FINRA) Investor Complaint Program. This may lead to FINRA investigating the action or behavior of the stockbroker and administering any necessary discipline in the event any sales practice violations are discovered. However, FINRA does not seek restitution for the investor who must file a FINRA arbitration claim or similar process to recover damages.

If an investor cannot resolve an issue with the stockbroker or the firm he or she works for or if the response of the broker and firm is unsatisfactory, filing a FINRA claim may be appropriate. A complaint can be made by filling out an online form. Alternatively, a claim can be made to the FINRA Investor Complaint Center.

A complaint must contain the following information:

1. The names of specific individuals (and the firm they work for) that the investor interacted with;
2. The name of the securities or a detailed description of the behavior that form the basis of the complaint;
3. The dates that relate to the activity or transaction;
4. A detailed description of the events and circumstances that form the basis of the complaint; and
5. The investor’s complete address, as well as a phone number or email address where the investor can be contacted.

The investigation process usually starts with FINRA requesting information and documents from the firm and the brokers (or other employees) involved. If the complaint does not have sufficient supporting evidence, it may not be possible to prove a rules violation occurred. As a result, the investor will be asked to cooperate with the investigation. This may include speaking with FINRA staff members, providing documentation, and giving a sworn statement of the facts. Further, the investor may have to testify at a FINRA disciplinary hearing.

FINRA has the power to provide discipline for misconduct and rules violations. This discipline includes the imposition of fines, suspensions, and bans from the securities industry. Further, FINRA may refer complaints to the Securities and Exchange Commission (SEC), other federal and state enforcement agencies, or another private securities regulator.

Investors should not use the Investor Complaint Program as a means of recovering for investment losses. If recovery of damages is sought, investors should use other methods (in addition to filing a complaint), such as arbitration, mediation, or the court system and do so immediately, as the passing of too much time can result in a bar to recovery. Using other methods for recovery is necessary because the investigation into a complaint is completed from a regulatory perspective, meaning FINRA’s goal is to discover whether any rules and regulations were violated. It does not mean an investor will recover for losses, even if violations are discovered.

If you have suffered investment losses and believe that it was due to stockbroker misconduct, speak with an experienced securities law attorney today. At the Silver Law Group, we provide help for investors through processes like FINRA arbitration and mediation.