Concerned financial advisor at his desk.

Surge in Client FINRA Arbitration Filings May Be on the Horizon

Experts expect the coronavirus pandemic and resulting market uncertainty to lead to a surge in FINRA arbitration filings. Historically, volatile times have tended to increase the number of broker negligence claims, meaning that FINRA arbitration filings are likely to increase until COVID-19 is under control and the markets bounce back and stabilize. In recent years, specifically between 2011 and 2019, the financial markets enjoyed an upswing with few major corrections. As a result, the number of FINRA arbitration cases that were submitted dropped by nearly 50% when compared to the period during and immediately after the 2009 financial crisis. A similar surge and eventual drop in FINRA arbitration cases occurred following the 1987 “Black Monday” market crash. 

However, it isn’t simply a down market that leads to an uptick in FINRA arbitration cases. Rather, experts have noted that market volatility, such as what we are currently experiencing, is what tends to increase the number of FINRA arbitration cases. And the coronavirus itself is not the only factor that is contributing to today’s volatile market. Rather, the responses of local, state, and federal governments to the pandemic are also effecting market fluctuations. In addition, not even the federal government’s $50 billion stimulus package has had the desired effect of stabilizing the market. With widespread business closures, limitations on travel and tourism, and additional restrictions, the financial markets are more unpredictable than ever, leaving investors subject to significant losses. And unfortunately for brokers, many of these investors are expected to utilize the FINRA arbitration process to try to recoup these losses. Brokers with customers who have suffered losses due to the coronavirus may face any of the following allegations during the FINRA arbitration process:

  • Overconcentration
  • Mismanagement
  • Unsuitability
  • Unauthorized trading
  • Failure to supervise
  • Poor trade execution
  • Breach of fiduciary duty
  • Churning
  • Selling away

Contact Our Experienced Business Litigation Lawyers Serving Northern New Jersey and the Greater New York Area 

If you are a broker or other financial professional who is facing FINRA arbitration or some other type of litigation threat, you need an experienced business litigation lawyer on your side. At Rosenblatt Law PC, we have a strong reputation as aggressive and successful trial lawyers who are well-equipped for arbitration and trial. In addition, our attorneys are experienced negotiators, and we are known for our positive results at the bargaining table. When you consult with our experienced business litigation attorneys, we’ll take the time to ensure that we understand your circumstances and objectives in order to give you as many options as possible for approaching your case. Regardless of whether your case involves litigation, mediation, or FINRA arbitration, you can trust us to protect your interests. In order to discuss your case with us, please contact our office as soon as possible to set up a consultation.