Securities law governs the rules that apply to stocks, bonds, investment products, and the professionals who sell them. When a broker, financial advisor, or investment firm violates those rules — through fraud, unsuitable recommendations, unauthorized trading, or outright theft — investors have legal remedies. Varnavides Law, PC represents investors across California and nationwide in FINRA arbitration proceedings and California court to pursue those remedies.
Our practice centers on one side of the table: the investor’s side. Gary Varnavides spent more than a decade at Sichenzia Ross Ference LLP in New York defending broker-dealers in securities litigation and FINRA arbitrations. He now uses that experience exclusively to represent investors — the people on the other side of those disputes. That background shapes how we evaluate claims, anticipate defenses, and build recovery strategies.
Securities cases are fact-intensive and rule-specific. Whether your loss involved a complex structured product, a FINRA-registered broker who churned your account in violation of FINRA Rule 2111 (suitability), or an investment advisor who breached the fiduciary duty owed to you, the applicable legal framework — federal and California securities statutes, FINRA rules, and common-law claims — determines the path to recovery. This page explains that framework and describes the matters Varnavides Law handles.
Key Takeaways
- FINRA arbitration is the primary forum: Most brokerage agreements require investors to arbitrate disputes through FINRA rather than file court claims. Varnavides Law represents investor-claimants at every stage of FINRA proceedings.
- Securities fraud has distinct federal and state tracks: Federal claims under 15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5 co-exist with California claims under Corporations Code § 25401. Both may be available in the same dispute.
- FINRA Rule 12206 imposes a six-year eligibility cutoff: FINRA arbitration claims must be filed within six years of the occurrence or event giving rise to the dispute (FINRA Rule 12206). In many cases this clock runs from the transaction date, not the discovery date — consult counsel promptly if you suspect misconduct.
- Breach of fiduciary duty is a separate cause of action: Fiduciary duty claims under the Investment Advisers Act of 1940 or California common law are distinct from Rule 10b-5 fraud claims. The elements, defendants, and remedies differ.
- Case minimum applies: Varnavides Law focuses on investor securities matters involving losses of $100,000 or more, where the economics of litigation and arbitration justify full representation.
What Securities Law Covers — and Why It Matters for Investors
Securities law is the body of federal statutes, SEC and FINRA regulations, and state statutes (in California, the Corporate Securities Law of 1968) that govern the offer, sale, and trading of securities, the registration and conduct of broker-dealers and investment advisers, and the disclosure obligations of public companies. For investors who have lost money, the most relevant parts of this framework are the anti-fraud provisions, the FINRA arbitration system, and the standards of conduct that apply to the professionals who managed their accounts.
At the federal level, the core anti-fraud framework is built on two provisions. First, 15 U.S.C. § 78j(b) (the Securities Exchange Act of 1934, § 10(b)) prohibits the use of any manipulative or deceptive device in connection with the purchase or sale of any security, in contravention of SEC rules. Second, 17 C.F.R. § 240.10b-5 — the rule promulgated under that authority — makes it unlawful to (1) employ any device, scheme, or artifice to defraud; (2) make any untrue statement of a material fact or omit a material fact necessary to make statements not misleading; or (3) engage in any act, practice, or course of business that operates as a fraud or deceit — in connection with the purchase or sale of any security. These are fraud and misrepresentation claims; fiduciary duty is a separate legal theory.
California’s parallel anti-fraud provision, Corporations Code § 25401, prohibits any person from offering or selling a security in California by means of a written or oral communication that includes an untrue statement of a material fact or omits a material fact necessary to make the statements not misleading. California claims do not require the same scienter proof as federal fraud claims and often provide a stronger recovery path for California-based investors.
The Investor’s Legal Toolkit
A securities claim may involve multiple overlapping legal theories: federal fraud under Rule 10b-5; California fraud under Corporations Code § 25401; breach of fiduciary duty (for investment advisers subject to the Advisers Act or California common law); FINRA Rule 2111 suitability violations; FINRA Rule 2010 commercial honor violations; common-law negligence; and breach of contract. An experienced securities attorney evaluates which theories apply to your facts and forum. Not every theory is available in every case or forum.
FINRA Arbitration: The Primary Forum for Investor Claims
FINRA operates the largest securities dispute resolution forum in the United States. Most brokerage customer agreements include a pre-dispute arbitration clause that requires disputes between investors and their broker-dealers to be resolved through FINRA rather than in court. Under FINRA Rule 12200, arbitration is required when (1) the dispute arises in connection with the business activities of a member firm or associated person; (2) the dispute involves a customer and a FINRA member or associated person; and (3) the customer agrees to arbitrate or the brokerage agreement requires it.
FINRA reported 656 new arbitration filings in the first quarter of 2026 alone, with customer disputes representing approximately 69% of all filings. Through FINRA arbitration, investors can seek recovery for fraud, unsuitable investment recommendations, churning, unauthorized trading, breach of fiduciary duty (where it applies), failure to supervise, and a range of other misconduct claims. Awards are enforceable in federal and state courts.
Varnavides Law represents investor-claimants — never respondents — in FINRA arbitration. We prepare and file the Statement of Claim, manage discovery, retain expert witnesses where appropriate, and take cases through evidentiary hearing. Gary’s years spent defending broker-dealers in this same forum means we know how respondent firms construct their defenses and how to counter them. Representation is available to investors nationwide — FINRA proceedings are not state-bar-bound, and we represent claimants wherever FINRA administers the arbitration hearing.
Securities Law Practice Areas
The matters handled by Varnavides Law fall into several categories, each described briefly below. Each category links to a dedicated page with the full legal analysis, procedural details, and the specific FINRA rules that govern those claims — including FINRA Rule 2111 (suitability) and FINRA Rule 12200 (mandatory arbitration) — as well as applicable federal and California statutes.
Investment Fraud
Claims arising from broker misconduct — churning, excessive commissions, unsuitable recommendations, unauthorized trading, overconcentration, margin abuse, and account mismanagement. The primary forum is FINRA arbitration; California court claims may run in parallel for certain fraud theories.
Securities Fraud
Federal and state fraud claims involving material misrepresentations, omissions, and schemes to defraud investors. Federal claims proceed under 17 C.F.R. § 240.10b-5; California claims proceed under Corporations Code § 25401. Fiduciary duty is a separate theory, available against investment advisers and others in relationships of trust.
FINRA Arbitration
FINRA arbitration is the mandatory dispute resolution forum for most broker-customer disputes. We represent investor-claimants at every stage: pre-filing evaluation, Statement of Claim, discovery, arbitrator selection, hearing, and award enforcement.
FINRA Arbitration — Municipal Bond Losses
Municipal bond investors face specific risks: unsuitable concentration recommendations, undisclosed markups, and misrepresentations about credit quality and liquidity. We represent investors who suffered losses in municipal bonds through FINRA arbitration.
Securities Litigation
Court-based securities claims in California state and federal courts for matters where court jurisdiction is appropriate — including claims against non-FINRA parties, investment advisers not subject to FINRA arbitration, and fraud claims in California state court under Corporations Code § 25401.
Regulatory Investigations Defense
When investors, broker-dealers, or financial professionals face SEC or FINRA investigation or enforcement, we represent them before the regulators. This regulatory defense practice is separate from investor-claimant recovery work; it covers defense of private clients in government-initiated proceedings.
Types of Investment Fraud Handled
Investment fraud encompasses a wide range of broker and adviser misconduct. Below are the primary categories Varnavides Law handles in FINRA arbitration and California court:
Churning
Excessive trading in an account to generate commissions without regard to the investor’s investment objectives. Grounds a FINRA Rule 2111 quantitative suitability claim and common-law fraud theory.
Unsuitable Recommendations
Recommendations that do not match the investor’s risk tolerance, time horizon, financial situation, or investment objectives. Governed by FINRA Rule 2111 (suitability) and, for retail customers, Reg BI (17 C.F.R. § 240.15l-1).
Unauthorized Trading
Placing trades without the customer’s authorization or in excess of discretionary authority. FINRA Rule 2010 (Standards of Commercial Honor) requires each member to observe high standards of commercial honor and just and equitable principles of trade. Unauthorized trading violates Rule 2010 and grounds independent common-law breach of contract claims.
Ponzi Schemes
Fraudulent investment structures paying early investors with funds from new investors rather than actual returns. Typically involve multiple legal theories including federal and state securities fraud.
Breach of Fiduciary Duty
Investment advisers registered under the Investment Advisers Act of 1940 owe a fiduciary duty of loyalty and care to their clients. Breach of that duty is a separate cause of action from fraud claims under Rule 10b-5.
Selling Away
When a registered representative sells investment products not offered or approved by the employing firm, outside the firm’s supervision. Governed by FINRA Rule 3280; generates both direct and supervisory liability theories.
Investment Products at the Center of Securities Claims
Many securities disputes arise from complex investment products that were sold to investors without adequate disclosure of risks, costs, or liquidity constraints. Varnavides Law handles claims involving:
| Product Type | Common Claim Basis | Primary Forum |
|---|---|---|
| Non-Traded REITs | Unsuitability; undisclosed commissions; misrepresented liquidity | FINRA arbitration |
| Private Placements | Unregistered securities; material omissions; Rule 10b-5 fraud | FINRA arbitration or California court |
| Structured Notes (Reverse Convertibles, Equity-Linked Notes) | Unsuitability; misrepresented downside risk; undisclosed embedded fees | FINRA arbitration |
| Variable Annuities | Unsuitable recommendations; unnecessary 1035 exchanges generating commissions | FINRA arbitration |
| Municipal Bonds | Unsuitable concentration; undisclosed markups; credit misrepresentation | FINRA arbitration |
| Cryptocurrency (Broker-Sold) | Fraud; unsuitability; misrepresentation about regulatory status | FINRA arbitration or California court |
Investment product claims often involve FINRA suitability rules (Rule 2111) as well as federal and state fraud theories. The product’s complexity and how it was sold — in particular, whether material risks were adequately disclosed — determines which theories apply.
Key Legal Standards in Securities Cases
Understanding the applicable legal standards helps investors assess whether their loss is recoverable. The following are the most frequently relevant standards in the matters Varnavides Law handles:
FINRA Rule 2111 — Suitability (Three Sub-Obligations)
FINRA Rule 2111 imposes three distinct suitability obligations on member firms and their registered representatives: (1) reasonable-basis suitability — the recommended product is suitable for at least some investors after adequate due diligence; (2) customer-specific suitability — the recommendation is suitable for this particular customer’s investment profile (risk tolerance, time horizon, financial situation, investment objectives, experience, and liquidity needs); and (3) quantitative suitability — a series of recommendations, taken together, is not excessive relative to the customer’s profile (the doctrinal home of churning claims). Reasonable-basis and customer-specific failures are pleaded and proved differently; failing to distinguish them weakens a claim. For recommendations made on or after June 30, 2020 to retail customers, Reg BI’s Care obligation overlays Rule 2111 and applies the higher best-interest standard; Rule 2111 remains the governing framework for pre-June 2020 conduct and for recommendations to non-retail customers.
Reg BI — The Best Interest Standard for Retail Customers
Since June 30, 2020, broker-dealers making recommendations to retail customers are subject to 17 C.F.R. § 240.15l-1. Reg BI imposes four obligations: (1) Disclosure — full written disclosure of material facts about the recommendation and the firm’s conflicts of interest; (2) Care — a best-interest standard requiring the recommendation to be in the customer’s best interest based on their investment profile (this is an intermediate standard higher than prior suitability, though distinct from the full fiduciary duty applicable to investment advisers); (3) Conflict-of-interest — policies and procedures to identify, disclose, and mitigate conflicts; and (4) Compliance — written policies to achieve compliance with the rule. Reg BI does not create a private right of action; FINRA arbitration is the enforcement mechanism for retail investors.
Investment Adviser Fiduciary Duty
Investment advisers registered under the Investment Advisers Act of 1940 owe a federal fiduciary duty of loyalty and care to their clients. This duty — established by the Supreme Court in SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963) — is distinct from the fraud elements of Rule 10b-5. Breach of fiduciary duty requires showing the adviser placed its interests ahead of the client’s, failed to disclose material conflicts, or acted contrary to the client’s investment objectives — without requiring proof of scienter in the same form as fraud claims.
FINRA Rule 12206: Six-Year Eligibility Cutoff
Important: Under FINRA Rule 12206, FINRA will not accept a claim for arbitration six years or more after the occurrence or event giving rise to the dispute. This is not a statute of limitations in the traditional sense — it is a FINRA eligibility rule that operates independently of state-law limitations periods. If your arbitration claim falls outside the six-year window, FINRA can decline jurisdiction entirely. Do not assume you have more time than you do. Consult counsel as early as possible.
Why Plaintiff-Side Representation Matters in Securities Cases
Securities litigation and arbitration are asymmetrical. Broker-dealer respondents typically appear through in-house legal departments or specialized defense firms with deep familiarity with FINRA procedures, arbitrator tendencies, and the defenses most effective at defeating investor claims. Investors benefit from representation that understands those same dynamics from the inside.
Gary’s decade of broker-dealer defense experience is not a credential we mention for marketing reasons — it is functionally relevant. When a respondent firm argues that a trade was suitable, that the investor understood the risks, or that the claim falls outside FINRA’s six-year eligibility window, we have firsthand experience with how those arguments are built and where they are vulnerable. That perspective shapes how we draft Statements of Claim, conduct discovery, and prepare for hearing.
Gary is recognized among New York Super Lawyers Rising Stars for 2015 through 2023 (top 2.5% in the New York Metro area). He holds California and New York bar admissions and maintains federal court practice in the Southern District of New York, Eastern District of New York, and Central District of California. His published article, “The Flawed State of Broker-Dealer Regulation,” received the IMCA Richard J. Davis Legal/Regulatory/Ethics Award — establishing his credentials as a substantive analyst of broker-dealer regulatory failures, not merely a practitioner.
California-Centered, FINRA-Nationwide
Varnavides Law, PC is headquartered in Los Angeles at 1901 Avenue of the Stars, Century City, CA 90067, with a bi-coastal presence in California and New York. FINRA arbitration representation is available to investors nationwide — FINRA proceedings are not state-bar-bound, and the firm represents claimants regardless of where the FINRA hearing is held.
California-based investors have additional protections under the state’s Corporate Securities Law of 1968, including the anti-fraud provision at Corporations Code § 25401. California state-court claims may run alongside or instead of FINRA arbitration when the respondent is not a FINRA member, when the dispute involves an investment adviser rather than a broker-dealer, or when the facts support state-court jurisdiction for strategic reasons.
Fee Structure
Varnavides Law offers a free consultation. Fee arrangements vary by matter and are discussed during consultation. You remain responsible for case costs — including FINRA filing fees, expert witness fees, deposition transcripts, and other litigation expenses — which are discussed and estimated during the consultation process.
Varnavides Law focuses on securities cases involving investor losses of $100,000 or more, where the economics of arbitration and litigation support full representation. If your losses fall below this threshold, we can discuss whether the facts and forum support a cost-effective path forward.
Frequently Asked Questions About Securities Law
Frequently Asked Questions About Securities Law
What is the difference between FINRA arbitration and a securities lawsuit?
FINRA arbitration is a private dispute resolution process administered by FINRA. Most brokerage agreements require disputes to be resolved through FINRA rather than filed in court. A securities lawsuit is filed in state or federal court and proceeds under court rules, discovery procedures, and the right to a jury trial. The two forums have different timelines, discovery rules, and decision-makers. FINRA arbitration is typically faster (averaging 13 to 16 months) and less discovery-intensive than federal court litigation. FINRA arbitration is the correct forum for most broker-dealer misconduct claims; court litigation may be appropriate for claims against non-FINRA parties such as unregistered investment advisers or when the brokerage agreement does not contain a mandatory arbitration clause.
Is breach of fiduciary duty the same as a Rule 10b-5 securities fraud claim?
No. These are distinct legal theories with different elements, defendants, and proofs. Rule 10b-5 (17 C.F.R. § 240.10b-5) is a federal anti-fraud rule requiring proof of a material misrepresentation or omission made with scienter (intent to deceive or reckless disregard for the truth) in connection with the purchase or sale of a security. Breach of fiduciary duty is a separate claim — under the Investment Advisers Act of 1940 or California common law — applicable to investment advisers who owe a duty of loyalty and care to clients. A broker-dealer who engages in fraud may face both theories, but they are pleaded and proved separately. Conflating them can expose a client to defenses that exploit the doctrinal distinction.
What is FINRA Rule 12206 and how does it affect my case?
FINRA Rule 12206 is the Customer Code’s eligibility rule: FINRA will not accept a claim for arbitration if the claim arose six or more years before the arbitration filing. This is not the same as a statute of limitations — it is an eligibility rule under FINRA’s Customer Code of Arbitration Procedure that governs whether FINRA will accept and administer a claim. It operates independently of state and federal limitation periods. A claim can be timely under California or federal law but still be ineligible for FINRA arbitration if the underlying event occurred more than six years ago. For claims approaching the six-year mark, prompt filing is essential. Consult counsel as soon as you identify potential misconduct.
What does it mean that Gary previously defended broker-dealers?
Before founding Varnavides Law, PC, Gary Varnavides built a career on the defense side of broker-dealer disputes. That insider experience — understanding how respondent firms and their counsel construct defenses, which arguments arbitrators find persuasive, and where defense strategies are most vulnerable — is now applied exclusively in service of investors. He does not currently represent broker-dealers or defend brokerage firms in investor disputes. The practical value for clients is an attorney who has seen these cases from both sides of the table.
Do I need a securities lawyer licensed in California, or can I use any attorney?
For California court-based securities claims, you need an attorney licensed in California. Varnavides Law, PC is California-licensed and practices before California state and federal courts. For FINRA arbitration, representation is not technically restricted to counsel licensed in the state where the hearing is held — FINRA proceedings are administered nationally and are not limited by state bar admission; nationwide representation is available regardless of where the FINRA hearing is held. Working with California-licensed counsel matters if parallel state-court claims under Corporations Code § 25401 are available or likely.
What is Reg BI and how does it differ from the suitability standard?
FINRA Rule 2111 requires brokers to have a reasonable basis to believe a recommendation is suitable for the customer — a suitability standard. Reg BI (17 C.F.R. § 240.15l-1), effective June 30, 2020, raises that threshold for retail customers to a “best interest” standard: the recommendation must be in the retail customer’s best interest at the time it is made, without placing the broker’s financial interest ahead of the customer’s. Reg BI does not create a private right of action — investors enforce it through FINRA arbitration, not through a direct regulatory enforcement claim. For recommendations made before June 30, 2020, Rule 2111 suitability applies. For post-June 2020 recommendations to retail customers, Reg BI applies.
How long does FINRA arbitration take?
FINRA’s published dispute resolution statistics show the average processing time for FINRA arbitration cases is approximately 13 to 14 months from filing to close. Cases resolved by settlement or withdrawal tend to close faster; cases that proceed to a full evidentiary hearing take longer. Simplified proceedings (for claims under $50,000, decided on papers) are the fastest. The timeline depends on case complexity, discovery volume, arbitrator scheduling, and whether the parties pursue mediation. During your consultation we can provide a realistic timeline estimate based on the specific facts of your case.
What types of securities losses are recoverable through FINRA arbitration?
FINRA arbitration can address a wide range of investor losses caused by broker-dealer misconduct: losses from unsuitable investment recommendations; churning damages (measured as excess commissions and opportunity cost); losses from unauthorized trading; fraud losses where the broker misrepresented a product; damages from overconcentration in illiquid or high-risk securities; and losses caused by a firm’s failure to supervise its registered representatives. Recoverable damages typically include out-of-pocket losses, consequential damages, and in some cases interest and attorneys’ fees. Punitive damages may be available under California law in appropriate cases; in FINRA arbitration, their availability also depends on whether the arbitration agreement and applicable law permit the panel to award them (see FINRA Rule 12904). FINRA arbitrators do not award damages that amount to guaranteed investment returns — claims are assessed against what the investment should have been, accounting for provable losses caused by misconduct.
About Varnavides Law, PC
Varnavides Law, PC is a securities litigation boutique based in Century City, Los Angeles, with a bi-coastal practice in California and New York. The firm concentrates exclusively on investor representation as claimant-side counsel — we do not defend broker-dealers, investment advisers, or financial institutions in investor disputes. FINRA arbitration representation extends to investors nationwide.
The firm was founded by Gary Varnavides following a career on the defense side of broker-dealer disputes. His background and credentials are described above.
Contact Varnavides Law, PC for a Free Consultation
If you lost money through broker misconduct, securities fraud, unsuitable investments, or unauthorized trading, we can evaluate whether you have a viable claim. Consultations are confidential and free for cases meeting the firm’s minimum threshold.
Serving investors across California and representing clients nationwide in FINRA arbitration.
Or call (310) 367-3654 to speak directly with our team.