FINRA Arbitration

K&L Gates regularly represents broker-dealers in arbitrations throughout the United States in disputes before the Financial Industry Regulatory Authority and previously before its predecessor organizations, the National Association of Securities Dealers and the New York Stock Exchange. These arbitrations involve a multitude of investment disputes, which include suitability, churning, unauthorized trading, breach of fiduciary duty, common law fraud, and negligent misrepresentation claims, as well as executive compensation, trade secret, noncompete, pirating, and other employment-related claims. We have also defended broker-dealers in defamation claims arising from Form U-4 and U-5 reports and for wrongful termination.

The firm’s FINRA lawyers are experienced in providing an array of services, from representation in all aspects of the most complex arbitrations to particularized assistance in connection with one phase of arbitration, such as document production. Our engagements have varied from handling all of a client's arbitrations nationwide to representing a client in a discrete grouping of related claims concerning particular products, market events, or financial consultants.

We have extensive experience handling arbitrations for brokerage clients, which have involved, among other things, the following issues:

• Sales practices (including misrepresentation and suitability claims)
• Churning
• Unauthorized trading
• Improper exercise of discretion
• Breach of fiduciary duty
• Breach of contract
• Securities fraud
• Market manipulation
• Common law fraud
• Negligence
• Failure to meet margin calls
• Ponzi schemes
• Failure to supervise
• Indemnification and contribution
• Violation of regulations such as outside business activities and selling away
• Conflicting instructions between joint account holders (e.g., spouses)
• Instructions received from trust beneficiaries, when the account is held in the name of a trust
• Trade secrets
• Noncompete
• Raiding
• Disputes over commissions and bonuses
• Discrimination (national origin discrimination and sexual discrimination and harassment)
• Wrongful termination and related issues
• Negligent hiring
• Collection of advance payments when brokers did not fulfill repayment requirements (i.e., service years)
• Defamation

We have also represented brokers and brokerage firms in state and federal court proceedings involving, among other things, the following issues:

• Motions to compel arbitration or to confirm or vacate arbitration awards under state and federal arbitration acts
• Motions to enjoin arbitration proceedings
• Guardianship proceedings raising questions as to the proper person from whom the broker can take instructions
• FINRA investigations in connection with Form U-4 disclosure issues relating to pending claims, including seeking expungement of certain matters from the broker’s record
• Addressing allegations that a broker failed to make life insurance payments on behalf of an incapacitated customer
• Responding to discovery arising in divorce proceedings