Understanding FINRA Arbitration: Types of Claims Customers Can Bring Against Brokerage Firms

FINRA (Financial Industry Regulatory Authority) is a self-regulatory organization that oversees the brokerage industry in the United States. Customers can bring various types of claims in a FINRA arbitration, including:

Breach of Contract: This claim arises when a customer believes that a brokerage firm or broker has breached a contract, such as failing to follow the terms of an investment agreement.

Misrepresentation: This claim arises when a customer believes that a broker or brokerage firm has made false or misleading statements regarding an investment or the risks associated with it.

Negligence: This claim arises when a customer believes that a brokerage firm or broker failed to act with reasonable care and skill in managing the customer’s account.

Unsuitability: This claim arises when a customer believes that a broker or brokerage firm recommended an investment that was not appropriate for the customer’s investment objectives or risk tolerance.

Breach of Fiduciary Duty: This claim arises when a customer believes that a broker or brokerage firm breached its fiduciary duty to act in the customer’s best interest.

Unauthorized Trading: This claim arises when a customer believes that a broker or brokerage firm made trades in the customer’s account without the customer’s permission.

Churning: This claim arises when a customer believes that a broker or brokerage firm made excessive trades in the customer’s account for the purpose of generating commissions.

These are just some examples of the types of claims that customers may bring in a FINRA arbitration. The specific claims that can be brought may depend on the facts of the case and the applicable law.

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