FINRA “Statute of Limitations”  

How long do I have to file a FINRA Claim? 

If you have suffered significant losses investing with your financial advisor or broker, you may be able to recover your losses through FINRA Arbitration and Mediation. But what is the statute of limitations, or time limit for filing a claim? 

A statute of limitations is the length of time a civil or criminal case can be brought to legal proceedings. After the statute of limitations has run out, the parties in dispute can no longer file suit.  

While FINRA does not have codified Statute of Limitations there are FINRA timing rules that apply to claims and disputes that arise under the rules, regulations, or statutes administered by FINRA. 

The Financial Industry Regulatory Authority (FINRA) 

FINRA or the Financial Industry Regulatory Authority is a private corporation that acts to regulate the market. FINRA provides regulatory services to the financial industry, without the need of taxpayer funding and is not a part of the U.S. Government. FINRA also operates the largest dispute resolution forum in the securities industry.   FINRA Dispute Resolution is the forum for virtually all disputes between and among investors, brokerage firms and individual brokers.    

FINRA Arbitration is very different than court litigation, with its own specific rules of procedure and operation.  To see learn more, see the FINRA Code of Arbitration Procedure.   

FINRA Arbitration & Mediation   

Investors can file an arbitration claim or request mediation through FINRA when they have a dispute involving the business conduct of a brokerage firm or one of its brokers. You may be confused about the differences between resolving monetary disputes through arbitration or mediation and filing an investor complaint.  Dispute Resolution is not the same as filing an investor complaint.   

If you are looking to recover damages, filing an arbitration or mediation case through FINRA offers you a way to seek damages. Investors are not limited to one or the other option, you can file an investor complaint and file for arbitration.   

What is the FINRA “Statute of Limitations”? 

FINRA’s rules indicate that investors have six (6) years to file a claim for arbitration with FINRA. While this is a rule regarding whether the claim is eligible to be administered by FINRA (and not a statute of limitation per se), the six-year period starts when the event that gives rise to the legal claim occurred. 

FINRA Rule 12206 Time Limits: 

(a) Time Limitation on Submission of Claims 

No claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim.  The panel will resolve any questions regarding the eligibility of a claim under this rule.”  

How long do I really have to file a FINRA arbitration claim? 

According to FINRA, to take advantage of your legal rights, you must take action promptly or you may lose the right to seek a remedy or recover funds.  

However, when the “occurrence or event giving rise to the claim” occurred is a factual matter to be determined on a case-by-case basis by the FINRA arbitration panel. This may mean you have longer than six years in certain situations. 

Federal Laws and Regulations regarding Statute of Limitations 

The statute of limitations is generally established by state or federal statute (depending on the claim), and the statute of limitation for basic claims can range widely from state to state.  

Under the most used anti-fraud provision of federal securities law, Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 sets the statute of limitations at “two years after the fraud has been discovered and not more than five years after the fraud has occurred.” 

State Statutes of Limitations

Some states will allow you to file a lawsuit in state court for a violation of state law. Filing in state court might be the better option for an aggrieved investor. Statutes of limitations for state law claims could be as short as two years. 

How Does FINRA Arbitration Work? 

FINRA provides a forum for the parties to resolve their disputes. 

Arbitration is like going to court, but is usually faster, cheaper and less complex than litigation. It is a formal alternative to litigation in which two or more parties select a neutral arbitrator to resolve a dispute.   

The arbitrator’s decision in the dispute is called an award. The decision is final and binding. In resolving disputes through arbitration, a FINRA arbitrator or panel will listen to the arguments set forth by the parties, study the testimonial and/or documentary evidence, and then give a decision. When an arbitration case goes to a hearing, it can take up to 16 months for an award to be determined.   

The arbitration process works differently depending on the size of the claim. Claims involving more than $100,000 require an in-person hearing decided by a panel of three arbitrators, with one chairing the hearing.   

National FINRA Attorneys   

If you believe that you have been a victim of investment fraud, don’t wait to take action.  Please call the White Law Group at 888-637-5510 for a free consultation with a national FINRA attorney. 

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to the representation of investors in FINRA arbitration claims against brokerage firms throughout the United States.   

The White Law Group’s FINRA arbitration attorneys have handled over 700 FINRA arbitration claims involving unauthorized trading, unsuitable investments, fraud, negligence, churning/excessive trading, and improper use of margin.   

For information on The White Law Group and its representation of investors in claims against brokerage firms, visit http://whitesecuritieslaw.com.