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Simple English definitions for legal terms
Securities dispute resolution: Filing a complaint
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A quick definition of Securities dispute resolution: Filing a complaint:
When there is a disagreement about securities, the people involved can choose to go to arbitration to resolve the issue. To start the process, the person making the complaint (called the claimant) needs to write a document called a Statement of Claim. This document explains what the problem is, how it happened, and what the claimant wants to happen to fix it. There are two types of claims: legal claims (when someone's legal rights were violated) and industry-specific claims (when someone broke the rules of the securities industry). The claimant also needs to fill out a Submission Agreement and pay a fee to the Financial Industry Regulatory Authority (FINRA). Once everything is filed correctly, FINRA will give the Statement of Claim to the other person involved (called the respondent) so they can respond to the complaint.
A more thorough explanation:
When someone decides to pursue arbitration to resolve a securities dispute, they must file a Statement of Claim with the Financial Industry Regulatory Authority (FINRA). This document explains the types of claims being made, the amount of damages requested, and the facts that gave rise to the claim.
There are two types of claims that can be made: legal claims and industry-specific claims. Legal claims arise from the violation of legal rights, such as fraud, negligence, or misrepresentation. Industry-specific claims can be made for the violation of industry rules, such as suitability, excessive trading, or commingling.
Along with the Statement of Claim, the claimant must also file a Submission Agreement and pay FINRA filing fees. Claims can be filed online or by mail. If there are any deficiencies in the filings, they must be fixed, which can delay the arbitration process. Once the filing requirements are met, FINRA will serve the Statement of Claim on the respondent party or parties.
For example, if an investor believes their broker engaged in excessive trading, they could file an industry-specific claim with FINRA. They would need to provide evidence of the excessive trading and explain how it violated industry rules. They would also need to pay the filing fees and file the necessary paperwork with FINRA.
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