Investor Education
FINRA Arbitration vs. Lawsuit:
Which Path Is Right for IHC Investors?
If you lost money in an Inspired Healthcare Capital or Inspired Senior Living DST, you almost certainly cannot go to court — your brokerage agreement requires FINRA arbitration. Here is what that means, why it is often the better path anyway, and what to do next.
What Is FINRA Arbitration?
FINRA (the Financial Industry Regulatory Authority) oversees U.S. broker-dealers and their registered representatives. When investors open brokerage accounts, they typically sign agreements that contain a mandatory arbitration clause — meaning any disputes with the broker must go to a FINRA arbitration panel, not a courtroom.
The panel is made up of one or three neutral arbitrators who hear evidence, consider arguments from both sides, and issue a binding award. The process is governed by FINRA's Code of Arbitration Procedure.
For IHC DST investors, this is almost always the required forum. The broker-dealers who sold these products — including those who recommended them without adequate due diligence — are FINRA members subject to arbitration.
Why FINRA Arbitration Is Often the Better Path
Even if you could choose, FINRA arbitration offers real advantages for securities claims:
- Faster resolution: 12–18 months vs. 3–5+ years in court. With IHC's bankruptcy proceedings active, speed matters — your window to collect may be closing.
- Lower cost: Streamlined discovery means fewer depositions and lower litigation expenses, which preserves more of any recovery for you.
- Privacy: Arbitration is private. Court cases become public record. Many investors prefer to keep their financial situation confidential.
- Experienced decision-makers: Arbitrators are often securities industry professionals who understand DSTs, suitability standards, and broker duties — unlike a jury hearing these terms for the first time.
- Contingency fee alignment: Securities attorneys like Michael Bixby work on contingency. You pay nothing unless recovery is obtained — making the path economically accessible regardless of claim size.
Side-by-Side Comparison
| Factor | FINRA Arbitration | Court Lawsuit |
|---|---|---|
| Forum | FINRA arbitration panel (1 or 3 arbitrators) | State or federal judge + jury |
| Typical timeline | 12–18 months | 3–5+ years |
| Cost | Filing fees $1,125–$1,800; generally lower than litigation | Court filing fees + substantial discovery costs |
| Confidentiality | Private — no public record | Public court record |
| Discovery | Streamlined — fewer depositions, targeted document requests | Full discovery: depositions, interrogatories, expert witnesses |
| Appeal rights | Very limited — award is nearly final | Full appellate review available |
| Mandatory? | Yes — most brokerage agreements require it | Typically blocked by arbitration clause |
| Avg. resolution | $150,000–$200,000+ for securities claims nationally | Varies widely; often smaller after years of costs |
The 6-Year Eligibility Deadline
FINRA Rule 12206 bars claims more than six years old from the date the alleged wrong occurred — not from when you discovered the problem. If you invested in an IHC DST in 2020, your window closes in 2026.
IHC's bankruptcy proceedings are also active, which adds urgency. Evidence and financial records become harder to obtain over time. Acting now gives your attorney the best chance of building a complete case.
Frequently Asked Questions
Can I sue my broker in court instead?
In most cases, no. Brokerage agreements contain mandatory arbitration clauses. However, if your claim involves a registered investment adviser (RIA) who is not a FINRA member, court may be available. Attorney Bixby can review your specific agreements to confirm.
What claims can I bring in FINRA arbitration?
Common claims for IHC investors include unsuitability (the investment was not appropriate for your risk profile, age, or financial situation), failure to disclose material risks, excessive concentration in illiquid alternatives, breach of fiduciary duty, and violation of Regulation Best Interest (Reg BI).
What if IHC is in bankruptcy — can I still recover anything?
Yes. Your claim is against the broker-dealer and registered representative who recommended and sold you the IHC products — not against IHC itself. If your broker failed to conduct adequate due diligence, recommended a product unsuitable for you, or misrepresented the risks, the broker-dealer bears liability regardless of what happened to IHC.
Do I need an attorney for FINRA arbitration?
You are not required to have one, but the broker-dealers' defense teams are experienced in FINRA arbitration. Investors who represent themselves face a significant disadvantage. Michael Bixby handles these cases on contingency — you pay nothing unless recovery is obtained.
Free Case Review
Lost money in an IHC or Inspired Senior Living DST? Find out if you have a FINRA claim — no cost, no obligation.
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(833) 547-4994