As a financial advisor, you know that investors are going to complain whenever things don't go the way they expected. There is a big risk in investing money in the stock market, yet many people don't like to see their account balances go down. Since the inception of the Financial Industry Regulatory Authority (FINRA) in 2007, most investor complaints are settled out of court in FINRA's arbitration forum. Navigating the path of dealing with investor complaints can be daunting, especially without the help of securities lawyer. Keep reading to learn some tips on how to best resolve investor complaints to FINRA.
1. Hire a Securities Lawyer
The most important thing you can do is also the first thing you should do when you receive an informal complaint from one of your investors, which is to meet with a securities lawyer. It is imperative that you have this meeting before you respond to the investor who has submitted the complaint. Your lawyer will help you create a response to the complaint in such a way that will acknowledge the client's unhappiness and explain why the offending action happened, without having an apologetic tone. Any ounce of conciliatory tone in your letter can be used against you.
2. Implement a Document Hold
The next step is to implement a document hold to make sure no relevant documents or any other types of information about the complaining investor are destroyed. Your securities attorney may also help you with this. The lawyer is the expert, and he or she will know exactly what types of documents and information must be held on to, depending on the specific complaint. Keep in mind that you will have to hold on to all information pertaining to the complaint, including stuff that you may view as being damaging to your defense.
3. Include Your Strongest Factual & Legal Arguments in the Formal Response
If your case moves forward and a formal complaint is filed with FINRA, then you need to submit another response. In your formal response to the investor's allegations, you must include your strongest factual and legal arguments that will resemble more of a legal brief than a response letter to a disgruntled investor. Your securities attorney will also help you draft this important response.
Your formal investor complaint response should deny all inaccurate allegations the investor made of you and include strong defenses. The response should explain the controlling facts and law surrounding the issue at hand. The primary goal of this response is to advocate for yourself and prove why you did nothing wrong.
4. Obtain as Much Information About the Complaining Investor as Possible
Your securities attorney will reach out to the complaining investor's attorney to get as much information as possible about the issue at hand. Your attorney is looking for third parties who may help your case, such as witnesses or other advisors the investor may have worked with. The attorney is also looking for information about time periods related to the dispute, copies of account statements, new account forms, investment history, tax returns, and any other documentation that is associated with your specific situation. The exactly things an attorney may want to see varies case-by-case.
These are only 4 tips that can help you if you find yourself in the unfortunate situation of an investor filing a complaint with the FINRA about you. Since this is serious business in the financial world, you will want to follow the directions of your securities attorney without fail. Your attorney, after all, is the expert in this matter. If you have any questions about dealing with complaining investors, visit resources like www.carterwestlaw.com.