The Future of FINRA Arbitration Hearings: Winning Awards on Zoom
Securities law firm Fitapelli Kurta recently won a six-figure award for a client, through a FINRA arbitration hearing that took place over Zoom. During the arbitration, Fitapelli Kurta’s securities lawyers successfully argued that TD Ameritrade owed an investor compensatory damages following allegations of negligence, breach of contract, breach of fiduciary duty, and elder abuse.
Why Did the FINRA Arbitration Hearing Take Place Over Zoom?
This award was noteworthy as one of the first large awards to follow a Zoom arbitration hearing. In March 2020, FINRA suspended arbitration hearings over concerns that in-person hearings could pose a health risk during the COVID-19 pandemic. FINRA has since postponed all in-person mediation and arbitration proceedings until at least April 30, 2021, according to the most recent guidelines. Any scheduled arbitration proceedings before that date are either postponed or will take place in a virtual setting.
Virtual FINRA arbitration hearings have met with some controversy. In the August 2020 case Legaspy vs. FINRA, a broker attempted to argue that the arbitration process was too complex to take place over Zoom. The Court did not agree, ruling that Zoom arbitration does not stop parties from fully airing their arguments. The judge in that case pointed out that she had participated in successful hearings that had the added complexity of a translator.
Although FINRA introduced Zoom arbitration hearings in response to the pandemic, they might remain a part of FINRA arbitration even as public health concerns lessen. Laura McNamire, the regional director of FINRA Dispute Resolution Services, said in a virtual panel, “I think Zoom is here to stay in some capacity. It’s something that we would foresee offering as long as people want it.”
FINRA Arbitration Rules
Virtual hearings change the format, but not the rules. Most broker-dealers require investors to agree to resolve any disputes through the FINRA Dispute Resolution program, rather than in a civil court case. FINRA provides a neutral arbitration panel, and the regulator is not supposed to have any say in the outcome of the arbitration. Arbitration panels must apply securities laws to their rulings, but they do not have to interpret laws as strictly as a judge.
Unlike in a civil case, FINRA arbitration rulings are typically final, with extremely limited possibility for an appeal. According to FINRA, arbitration is better for investors because it typically resolves in less time than a court case.
Both parties have the chance to vet the arbitration panel. The investor and the firm receive a list of potential arbitrators. Each party strikes arbitrators from the list and ranks them according to their preference. The arbitrators with the highest overall rankings are appointed.
How Can I Prepare for a FINRA Arbitration Hearing?
Research suggests that you are more likely to recover losses if a securities lawyer represents you during a FINRA arbitration hearing. Call (877) 238–4175 or email info@fkesq.com for a free case evaluation.
