After your investment loss claims have been filed, your FINRA arbitration case will proceed to what’s called the “discovery” process. During this process, the lawyers gather the necessary documents and uncover facts relevant to the various claims and defenses at issue in your case. The parties in arbitration – both the investor and the brokerage firm – engage in discovery so that they can be properly prepared for the final arbitration hearing and avoid surprises that can adversely affect the outcome of the case.
In FINRA arbitration, most discovery takes place in the form of documents that the parties have in their possession relating to the claims and defenses in the case. In an effort to try to streamline the discovery process and cut down on the number of discovery-related disputes, FINRA has declared that certain documents are presumptively discoverable in all customer disputes. This includes a list of documents that brokerage firms are expected to produce in customer disputes, as well as a separate list of documents that investors are expected to produce.
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For brokerage firms, these documents include new account forms signed by the customer; documents relating the customer’s investment objectives and risk tolerance; notes maintained by the brokerage firm about the customer; compliance and supervisory reports relating to activity in the customer’s account; any recordings, telephone logs, and notes of telephone calls or conversations about the transactions at issue; and numerous other documents relating to the customer’s investments and the brokerage firm’s supervisory efforts.
Likewise, customers in FINRA arbitration are expected to produce documents including prior years’ tax returns, including both individual and business returns; net worth statements; emails with the brokerage firm; account statements from other, third-party brokerage firms; copies of other complaints made by the investor involving other brokers or brokerage firms; the customer’s resume; and various other documents as well.
While arbitrators do recognize exceptions to the discovery lists in certain cases, we tell our clients to be prepared to gather all of the documents identified by FINRA. In the video below, attorney Courtney Werning explains what we do with your documents once we receive them.
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It is critically important for investors to hire an experienced securities arbitration attorney when pursuing claims in FINRA arbitration. If you have questions about a potential case or the discovery process in particular, please give us a call today.
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