If you believe your financial advisor has been negligent, it’s best not to wait to do something about it. You have a limited amount of time to file a claim through FINRA’s arbitration system, and legal statutes of limitations may also apply.
FINRA’s Code of Arbitration says a claim must be filed with six years of the “occurrence or event” that gave rise to it. This is known as the Eligibility Rule. If six years have passed, the financial advisor can file a motion to dismiss.
For a claim to be dismissed, the arbitration panel must vote unanimously. If the panel dismisses the claim on these grounds, it can not rule on any other aspect of the claim. The claim is not necessarily automatically invalid if dismissed, but it can’t be resolved through arbitration.
Depending on where you live and the type of claim you have, statutes of limitations may also apply. Federal and state courts enforce cutoff dates to file different kinds of claims, and these can vary depending on the jurisdiction.
In cases of fraud, for example, federal law says claims must be brought within two years after the “discovery of the facts constituting the violation” and five years after the violation itself.
In general, courts do not distinguish between litigation and arbitration with regard to statutes of limitations.
If you believe you have a claim, it’s important to contact an attorney as soon as possible to determine whether you are within the statute of limitations and/or the Eligibility Rule.
For questions about potential claims against your financial advisor, contact us for your free consultation.