You may. If a registered broker-dealer or investment adviser sold you an investment that went against your risk profile and you lost money, they may have violated their legal duty to you. You may be able to get your money back via mediation or arbitration through the Financial Industry Regulatory Authority (FINRA).
This is because numerous trading exchanges have agreed that their members will resolve disputes in a FINRA forum. Those exchanges include:
- New York Stock Exchange, NYSE American, LLC, NYSE Chicago, NYSE National and Arca
- NASDAQ, BX, PHLX, Nasdaq ISE, LLC; Nasdaq GEMX, LLC, and Nasdaq MRX, LLC
- Cboe BATS EDGA Exchange, Inc., Cboe BATS EDGX Exchange, Inc., Cboe BATS BZX Exchange, Inc., Cboe BATS BYX Exchange, Inc., Cboe C2 Exchange, Inc., and Cboe Exchange, Inc.
- BOX Options Exchange, LLC
- IEX Group
- MIAX Options Exchange (MIAX)
- Municipal Securities Rulemaking Board (MSRB) (a self-regulatory organization for municipal securities registrants)
- Members Exchange (MEMX)
If your adviser or broker is a member of one of those exchanges, they are required to undergo FINRA mediation or arbitration when there is a customer dispute. You can find out if your investment professional is registered using the “Check Out Your Investment Professional” tool in the SEC’s website Investor.gov.
Mediation is a process where a neutral third-party helps the parties to the dispute communicate and come to a resolution everyone can live with. The neutral mediator does not make rulings and can give no legal advice. The mediator’s job is to keep the parties talking and moving toward resolution. This resolution generally results in a contract between the parties that would later be enforceable in court, if necessary.
If you can’t resolve your issues through FINRA mediation, you can still try arbitration.
In arbitration, a mutually-chosen, neutral arbitrator or a panel of arbitrators will hear the dispute in a forum that is a bit like a court. The arbitrators will hear evidence and arguments and make a final ruling, often with a monetary award to the customer. This ruling and award are final and generally cannot be appealed. The arbitrators’ ruling can be made into an enforceable court order, if necessary.
Both mediation and arbitration are typically simpler, faster and less costly than courtroom litigation. You can have an attorney, and you definitely should, especially in arbitration.
What is the deadline?
That depends on the exact nature of your dispute. The rules of FINRA arbitration require such actions to be filed within six years of the events in the dispute. However, some federal and state securities laws may have shorter deadlines. Therefore, FINRA recommends seeking out counsel and initiating your action without delay.