Frequently Asked Questions

FINRA stands for the Financial Industry Regulatory Authority. FINRA was formed in 2007 when
the New York Stock Exchange’s regulatory, enforcement, and arbitration division and the National
Association of Securities Dealers (“NASD”) were combined. It is a self-regulatory organization
that licenses, monitors, and enforces the actions of financial advisors and brokerage firms.
FINRA hosts a dispute resolution forum comprising both mediation and arbitration services where
aggrieved investors can bring their claims. KlaymanToskes files claims in FINRA’s arbitration
forum to help investors attempt to recover their investment losses.

Arbitration is an alternate form of dispute resolution. In other words, it is a way to solve your
dispute without using the traditional court system. Similar to the court system, there are still rules,
hearings, and documents that are required to be exchanged, but it is a streamlined process designed
to make your dispute faster, more efficient, and less expensive than the traditional court system.

A securities arbitration lawyer helps investors attempt to recover their losses caused by a financial
advisor or brokerage firm’s misconduct, including, but not limited to, breach of fiduciary duty,
conflict of interest, churning, overconcentration, failure to supervise, negligence,
misrepresentation, unauthorized trading, or unsuitability.
Although arbitration is not court, brokerage firms are typically experienced in the technical aspects
of FINRA’s arbitration forum. Brokerage firms will also have highly experienced lawyers to
represent them. An investor will most likely have a better outcome when represented by an
experienced securities lawyer who understands both the technical and substantive issues
surrounding an investor’s claim.

A mediation is a structured process created to allow both sides to attempt to reach a resolution of
their disagreement. Mediation allows both sides to maintain some control over the outcome of the
case. A neutral third party, called a mediator, helps lead the negotiation to reach an agreed-upon
resolution. The mediator does not decide the outcome of the case; instead, a mediator leads the
process to assist the parties in reaching their own agreement. In arbitration, however, the arbitrators
decide the outcome of your case.

No. KlaymanToskes offers free, confidential consultations. If you are considering hiring our firm,
please contact us now.

We are a contingency fee only firm. That means that we are not paid unless we are able to recoup
some or all of your investment losses.
There may be additional fees and costs in addition to attorneys’ fees. For example, to hire experts,
pay for mediators, filing fees, or to reimburse administrative fees. If you already have an agreement
with our firm, all of that information can be found in your retainer agreement.

A real estate investment trust (“REIT”) is a corporation, trust or association that owns and
sometimes manages income-producing real estate. REITs pool the capital of numerous investors
to purchase a portfolio of properties which the typical investor might not otherwise be able to
purchase individually. REITS allow investors to earn dividends from real estate investments
without the responsibilities of owning real estate directly. REITs can offer a stream of income, but
do not provide for appreciation of principal.
Although publicly traded REITs are highly liquid, non-traded REITs pose unique risks to investors.
Non-traded REITs can be highly illiquid for an extended period of time and they are not listed on
public exchanges. Investors generally must either wait for the non-traded REIT to have an initial
public offering (“IPO”) to become publicly traded, or wait for the REIT to liquidate its holdings.
At the time of liquidation, the value of the investment in a non-traded REIT could have either
decreased or become worthless.

Churning is the excessive buying and selling of investments to generate commissions. A broker or
financial advisor will generally churn an investment account without regard to the investor. It is
both illegal and unethical.

Selling Away describes a situation in which a broker sells a security away from his or her
brokerage firm without first obtaining written approval from the firm, and for engaging in outside
business activities without prior notice to the firm. Selling Away is a violation of FINRA rules,
and serves a basis for both formal disciplinary actions and liability in FINRA arbitration claims.

In a pump and dump scheme, fraudsters spread false or misleading information to create a buying
frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their
own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the subject

stock, the price falls and investors lose money. Promoters often use social media, investment
research websites, advertisements, email, Internet chat rooms, and other means to spread false and
misleading information about a company’s stock.

A fiduciary duty is the highest standard of care. If your financial advisor has a fiduciary duty to
you when managing your account, they are both legally and ethically required to put your best
interests ahead of his or her own.