FINRA Releases the Latest Arbitration Case Filings and Hearing Statistics

The Financial Industry Regulatory Authority (FINRA) regularly releases statistics about arbitration case filings, virtual hearings, and other trends. Broker-dealer firms and financial advisors can assess these findings to get a sense of FINRA’s priorities, actions, and enforcement activities from quarter to quarter. If you need help removing inaccurate or false customer dispute information from BrokerCheck, contact a dedicated and knowledgeable securities law attorney to learn more about the expungement request process. In the meantime, let’s take a look at some of the key takeaways from FINRA’s most recent data and statistics regarding arbitration case filings and virtual hearings.

Decrease in the Number of FINRA Arbitration Case Filings

Overall, the number of arbitration case filings from January through November 2022 fell by 11 percent (compared to cases filed during the same period in 2021). Additionally, the number of arbitration cases that were closed in 2022 fell by 12 percent from the previous year. The number of open cases decreased by 21 percent from 2021 to 2022.

Top Controversy Types in Customer Arbitrations

Over the course of 2022, 2,671 new cases were filed, and 3,564 cases were closed. Of these cases, the top customer arbitration controversy was a breach of fiduciary duty, which impacted 1,340 cases. Other primary issues included: Negligence (1,261 cases), Failure to Supervise (1,075 cases), Breach of Contract (1,048 cases), Misrepresentation (990 cases), Suitability (899 cases), Omission of Facts (825 cases), Fraud (699 cases), Violation of Blue Sky Laws (402 cases), Manipulation (266 cases), Breach of Regulation BI (216 cases), Elder Abuse (188 cases), Unauthorized Trading (149 cases), Errors-charges (99 cases), and Mark-ups (83 cases). Between 2021 and 2022, the only controversy types that increased in number were Violation of Blue Sky Laws, Breach of Regulation BI, Elder abuse, and Mark-ups.

Most Common Security Types Involved in 2022 Customer Arbitrations

Of the 2,671 new cases filed in 2022, the majority concerned Common Stock (349 cases) and Corporate Bonds (239 cases). Other popular security types involved in customer arbitration filings included: Real Estate Investment Trusts (211 cases), Mutual Funds (159 cases), Options (153 cases), Private Equities (146 cases), Limited Partnerships (122 cases), Business Development Company (88 cases), Exchange-Traded Funds (60 cases), Annuities (57 cases), Municipal Bond Funds (50 cases), Variable Annuities (48 cases), Preferred Stock (42 cases), Structured Products (38 cases), and 401(k) (35 cases). The number of customer arbitration cases involving Corporate Bonds jumped significantly from 2021 to 2022 (57 cases in 2021 to 239 cases in 2022).

Virtual Arbitration Hearing Statistics in 2022

In the wake of the Covid-19 pandemic, FINRA allowed arbitration proceedings to take place virtually using Zoom. As of December 21, 2022, a total of 1,222 arbitration cases have conducted one or more hearings via Zoom, including 504 customer cases and 718 industry cases. Additionally, there have been 748 joint motions for virtual hearings (327 customer cases and 421 industry cases). Of the customer-related contested motions for virtual hearings, 62 percent were granted, and 38 percent were denied. Seventy-five percent of Intra-industry contested motions for virtual hearings were granted, while 25 percent were denied. FINRA has had much success with its pilot program that used Zoom to hold prehearing conferences, so it is now making Zoom video conferencing the default method for these proceedings. However, if the parties or the panel wishes to hold in-person prehearing conferences, they may agree to do so.

Trusted Legal Guidance When You Need it Most

While FINRA allows brokerage firms and financial institutions to represent themselves during arbitration, enlisting the guidance of a trusted and experienced securities law attorney is the best way to ensure the most favorable outcome possible. If you are seeking to have erroneous or false customer dispute information expunged from the CRD and BrokerCheck, enlisting the help of a lawyer is your best option. Your attorney is familiar with the arbitration process and they can help you understand what to expect at each stage of the process. Reach out to a seasoned attorney today to get started.

If you need help pursuing an expungement request, call Judex Law, LLC, today at (303) 523-4022 to discuss your situation with a trusted and experienced securities law attorney.

Table of Contents