If your firm is currently dealing with a dispute, you may be facing the process of FINRA arbitration. And if this is the case, you need to prepare for FINRA arbitration discovery and understand just what this process is meant to accomplish. Preparing beforehand will help discovery move forward smoothly so that you can reach a resolution as quickly as possible.
Any time you’re facing FINRA arbitration, you need to get the help of a FINRA arbitration attorney in Colorado. At Judex Law, LLC, founding attorney, Tosh Grebenik, can help you understand the FINRA discovery rules and the steps you will need to go through during discovery. So, keep reading to find out what financial advisors and firms should expect when beginning the FINRA arbitration discovery process.
How Discovery Works in FINRA Arbitration
It isn’t uncommon for financial advisors or financial firms to run into disputes, which often require some type of legal resolution. And when this is the case, the best course of action is usually FINRA arbitration, which is faster and less costly than traditional court litigation. Additionally, arbitrators usually have specialized knowledge in securities law, which can help them make better decisions regarding dispute resolution.
FINRA operates like a federal self-regulatory organization, so the discovery process looks the same, no matter the state. The entire discovery process is also less formal than court litigation, allowing greater flexibility to account for different circumstances.
A FINRA arbitration discovery hearing may occur in person, by video conference, or by phone, allowing the claimant to present their side of the case first. Next, the respondent can present their side of the case, and both parties will have the opportunity to deliver a closing statement at the end of the hearing.
The final decision will come from neutral decision makers, otherwise known as arbitrators, and they will usually issue their decision, often referred to as an award, within 30 days.
Common Documents Requested During Discovery
As mentioned above, the FINRA discovery guide is not completely rigid, allowing for flexibility throughout the discovery process. This flexibility also applies to the types of documents requested during discovery.
Here are some examples of the most common documents used during the discovery process for financial advisors and firms:
- Customer account records.
- Emails, texts, and other communication records.
- Transaction and investment records.
- Business and ownership records.
- Account statements.
- Financial statements.
Handling Discovery Requests and Disputes
In addition to the standard forms of documentation used during FINRA arbitration discovery, the parties can also request additional documents. When doing this, the request must be specific and relevant to the case. And when you receive a discovery request, you have 60 days to respond.
Keep in mind that you have the right to object to a discovery request for the following reasons:
- It’s overboard
- It’s irrelevant
- Requested documents contain privileged information
- The request is burdensome
If either party refuses to comply with the FINRA discovery rules, the other party has the right to file a motion to compel with the arbitrator. You can either do this through filing a written request or verbally during the arbitrary hearing.
Parties may also face sanctions for violations during the FINRA arbitration process if they fail to cooperate or abuse the process in some way.
Preparing for FINRA Arbitration Discovery
Despite the fact that the FINRA discovery process for resolving disputes is less formal than traditional litigation, you still need to prepare beforehand so that the process can go as smoothly as possible. So, here are some steps financial advisors and firms should take when preparing for FINRA arbitration discovery:
- Discovery guide: You should review the FINRA discovery guide to identify the presumptively discoverable documents that you may need to present. Keep in mind that these will look different for customer vs industry arbitration cases. This also applies to the governing rules for customer vs industry arbitration cases.
- Preserving records: Once you understand the discoverable evidence during a FINRA arbitration discovery, you need to begin preserving relevant records. Organizing and preserving records early on can help you avoid delays, ensuring you can meet all of the necessary deadlines.
- Procedural deadlines: You also need to familiarize yourself with the FINRA arbitration procedural deadlines so that you maintain compliance throughout this process. For example, general discovery requests require a response within 30 to 60 days. Additionally, you usually have 45 days to serve and file an answer once you receive a statement of claim.
- Legal counsel: Although FINRA arbitration is designed to be faster and simpler, it’s still a relatively complex legal process. So, it’s strongly recommended that you navigate FINRA discovery disputes with the help of a FINRA arbitration lawyer in Colorado. A lawyer can help you prepare ahead of time, handle discovery requests, and gather all of the relevant documentation needed.
Get the Help of an Experienced FINRA Arbitrary Lawyer
Are you going through FINRA arbitration rather than traditional court litigation as a way of resolving a dispute? If so, you need to understand what the FINRA arbitration discovery process entails and how you can prepare for success. At Judex Law, LLC, we can help you develop a financial advisor arbitration defense strategy as well as provide assistance as you navigate the discovery process. For legal representation, please reach out to our Bloomfield, Colorado office today by calling us directly at 303-523-4022 to get the help of an experienced FINRA arbitration attorney.
FAQ Section
Are emails and text messages discoverable in FINRA arbitration?
Yes. Different forms of communication, including emails and text messages, are considered discoverable during FINRA arbitration as long as they are relevant to the claims or defenses.
Can you object to a FINRA discovery request?
Depending on the circumstances, yes. You have the right to object to a discovery request if you believe it is irrelevant, creates a burden, or includes privileged information.
What happens if a party does not comply with discovery?
The other party can seek arbitrator intervention as a way of trying to resolve the arbitration dispute. However, if that still doesn’t work and the other party isn’t compliant with the discovery rules or process, they could face sanctions.