Not only are those engaged in the securities business in Pennsylvania subject to SEC regulation, but they must also register with a self-regulatory organization. Those who are not members of specific securities exchanges must register with an organization called the Financial Industry Regulatory Authority (FINRA). This is a non-governmental entity with the power to fine and discipline its members.
FINRA gives customers who feel that they were mistreated or defrauded by their investment advisor another route to go in order to achieve some justice. Broker-dealers who are registered with FINRA can be taken to arbitration when a customer feels that the broker has violated the rules. This includes financial schemes and false promises to which customers sometimes fall victim.
FINRA registration requires members to submit to an arbitration process when their customers have complaints. This is a way of taking some sort of legal action that does not involve a full-fledged lawsuit in court. Investors can also request that FINRA mediate a dispute between them and a member broker-dealer. This is an easier and cheaper way of having a dispute heard in a neutral forum where the arbitrator has the ability to give aggrieved customers some relief. One can even file a complaint with FINRA about the conduct of a broker-dealer but must file an arbitration if they are seeking money or other damages.
When going up against a securities firm in an arbitration, it is helpful to have legal representation since the broker-dealer will most certainly be represented by their own attorneys. FINRA rules can be complex for individual investors to understand. The advice of an attorney could also be instrumental in deciding whether to pursue FINRA intervention or take the case to court in a securities lawsuit. Investors have many different options from which to choose.