The importance of an unblemished record for an agent seeking loyal clients or new business cannot be stressed enough. When served with a lawsuit for negligence or misconduct, their career may hang in the balance. Notwithstanding, it is worth noting that indictment alone shall not secure its place in your record, nor does it promise a successful suit. The verdict will depend on the way by which the charges are administered.


FINRA (Financial Industry Regulation Authority) oversees all operations vis-à-vis trading stocks in the United States of America. It requires all agents to register with them, ensuring that they adhere to the expected etiquettes alongside looking into any possibilities of misconduct. They reserve the right to penalize or revoke their licenses. The results of the inquiry shall determine which method of sentence shall be imposed.


In conducting their inquiry, FINRA shall consider numerous factors, such as the agent’s record to date, if the agent tried to cover up the misconduct, if they complied with the disciplinary process, if they have exhibited similar forms of wrongdoing in the past, and the magnitude of damages caused.


FINRA is also responsible for announcing the Sanction Guidelines, which details the different kinds of delinquency, their entailing penalties, and so on. These guidelines don’t always hold, as the incident’s factors could influence sentences to a lighter or more extreme one. Moreover, groups of infractions may be regarded as just a single infringement. This occurs when the delinquency was inadvertent, if compensations were made, or if the offense took place owing to an underlying issue that has now been resolved.


Accusations may be resolved through various means, such as intercession or a trial. The cheapest way would be intercession. This is not surprising given that cases are typically resolved in just three months, with a conciliation session of just twenty-four hours. Entities seeking an intercession may appeal to the FINRA. It could be done even after the lawsuit has been served, in which case the suit would be adjourned till the end of the session or if one of the entities appeals it. If an entity appeals for a conciliation, FINRA will consult the other entity to ascertain if they would be willing to partake in it. Given that they agree to it, FINRA would refer them to arbitrators along with their qualifications. The arbitrators are independent individuals who are not working for FINRA.


When the entities choose their arbitrator, FINRA will provide them with a Mediation Submission Agreement. This document enlists the guidelines of the activity, as well as the process to remit fees. The policies are subject to amendment. The entities would then send written documents to the arbitrator, apprising them of their objectives and the critical factors for reconciliation. Once those are settled, the meeting session is scheduled.


The arbitration session comprises a commencing statement by the conciliator, the plaintiff’s and defendant’s declaration of their stances, respectively, and a classified session between the conciliator and their entities. Provided that the session yields a resolved dispute, the entities would sign off on a preliminary contract. Else, an indictment may be made.


A second procedure by which accusations may be resolved is private adjudication. Save for a few unique scenarios, the decisions passed here are irrevocable. To initiate this adjudication, the prosecution shall file a report highlighting the issue and the entities involved. They also have to fill out a FINRA Submission Agreement and file it customarily alongside the submission charge. Once this is done, FINRA shall notify the defendant about this suit, binding them to reply with their guarding points by forty-five days.


The entities shall then choose their adjudicator. Should the compensation be worth less than $50,000, the case would be eligible for Simplified Arbitration Process. In this protocol, the verdict passed is influenced solely by the written records. There is no official trial. However, if the value is between $50,000 and $100,000, one adjudicator must be present at the trial. Else, if it is more than $100,000, three adjudicators would be selected. The entities shall reserve the right to decide if they could be private adjudicators or not. If they are private, it will mean that they are independent individuals with no ties to the commercial sphere.


When the adjudicators have been selected, a preliminary hearing is scheduled. In this session, all legal personnel shall negotiate possible disputes, prospects of engaging in arbitration, and so on. Next, the entities shall partake in the discovering stage, where all pertinent files are shared.  A directive shall be provided by FINRA, which details the various kinds of relevant discovery to be solicited.


Finally, a trial takes place. The schedule would be similar to that of a formal judiciary case, where opening and closing arguments are made, attestations are presented, and so on. In general, this procedure lasts four days after which, the adjudicator would issue a written verdict by a month.


As has been mentioned before, the decisions are irrevocable. This is because FINRA does not have any provision to question it. Notwithstanding, this may not hold for some exceptional circumstances, such as when the verdict was biased or misdirected, attorneys’ dereliction of duty, a travesty of an efficient solution is passed, or if there were no solid foundation underlying the conclusion.


Should you have reason to believe that the verdict was unfair, be sure to question it by applying to the National Adjudicator Council. They will go through your case to ascertain the compliance of the decision with FINRA’s Sanction Guidelines. No other steps would be taken while the application is being evaluated.


Alongside the adjudicator’s decision, the National Adjudicator Council’s ruling could also be challenged, whereby plaintiffs shall be required to apply to the Securities and Exchange Commission and the Federal Court.