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Can I recover my investment losses?
Our firm's attorneys have recovered millions of dollars for investors who had various types of claims. The most common claims are based upon unsuitable recommendations to purchase or sell securities. However, not all claims are based upon suitability. Determining whether investors have valid claims to recover losses can often be determined by affirmatively answering any of the following questions:
1. Did the broker recommend investments that were too risky?
2. Did the broker excessively trade your account?
3. Did the broker execute trades without your authorization?
4. Did the broker over-concentrate your portfolio in a particular security (too many stocks?)
5. Did the broker recommend the purchase of a variable annuity?
Many investors experience stock or investment losses due to the improper advice of their investment professionals. Many brokers and financial advisors make errors or give clients inappropriate advice that ultimately results in losses. Losses can also occur when investment professionals:
- Give poor investment advice
- Mismanage investment accounts
- Provide inaccurate information to the client
- Failure to discuss investment risk
If you have experienced stock or investment losses due to poor advice from a stockbroker or financial advisor, you may be allowed to take legal action to recover your lost funds. The best thing you can do after you have experienced significant investment losses is to speak with an experienced securities attorney that has represented investors in FINRA and NFA arbitration, as well as Federal Court. A securities attorney can review your individual situation, investigate the conditions surrounding your investments, determine if you received inappropriate investment advice and help you take legal action to recover your losses.
Our firm's attorneys have represented investors worldwide in over 300 FINRA and NFA arbitrations and Federal Courts. Most of our firm's clients are represented on a contingency basis; as such they do not pay a legal fee unless we recover money on their behalf.
Most brokerage agreements contain a mandatory arbitration clause. The clause mandates that all disputes between brokerage firms and investors be resolved in arbitration, rather than in State or Federal Court. The implications of a mandatory arbitration agreement are significant. Rather than having disputes involving securities transactions decided by a jury, investors claims are resolved by a panel made up of typically 3 arbitrators who are knowledgeable in the area of securities laws and regulation. The U.S. Supreme Court decision, Shearson v. MacMahon, 482 U.S. 220 (1987) enforced mandatory binding arbitration clauses in the securities industry. The most significant difference is that arbitration awards are final and binding, subject to review by a court only on a very limited basis.
FINRA & Arbitration
In order to legally charge for advice (or commission) regarding the sale of securities (stocks, bonds, mutual funds) broker-dealers must be members of the Financial Industry Regulatory Authority (“FINRA”), formerly the National Association of Securites Dealers (“NASD”). Customers are bound to arbitration by contract and registered representatives (sometimes referred to as stockbrokers or financial advisors) and their firms are contractually bound to arbitrate their disputes by their membership in FINRA. Upon applying for membership in the FINRA, the broker-dealer and the stock broker agreed to be bound by the rules of the FINRA.
Commencing an Arbitration
Arbitrations are commenced by filing a statement of claim (complaint) within the applicable arbitration forum, together with a submission agreement and the required fees. The initial filing fee depends the amount of monetary loss being claimed. Generally the fees range from $475 to $1,800. Generally, our firm accepts cases on a contingency fee basis (meaning we do not get paid for our time unless we recover money). However, clients are generally responsible for the costs of prosecuting their cases.
The Statement of Claim
The Statement of Claim does not need to meet the specific pleading guidelines generally required in court. It may be in narrative form and should specify the relevant facts of the dispute, detailing the nature of the dispute, the relevant dates, the transactions in dispute, the investments involved and the amount of damages and the relief sought.
Like the Statement of Claim, the Answer can be narrative or in pleadings form. The Answer will specify all of the available defenses that the party relies upon, and all facts relative to said defenses.
After the filing of all claims, answers and replies, FINRA will typically notify the party of the location of the hearing. The hearing location is typically the location where the investor was a resident of when the transactions at issue occurred.
All parties are entitled to "discovery", that is the exchange of documents prior to the actual trial. Discovery is a large part of the arbitration process and a good attorney will always participate as exhaustively in discovery as the case permits. In bringing an arbitration claim, customers and brokerage firms are required to exchange documents through what is called the discovery process. FINRA has compiled a list of documents that customers and brokerage firms must produce to each other in securities claims involving customer disputes. These documents include but are not limited to the clients: tax returns for relevant years, statements, trading confirmations, marketing material, correspondence, resume, statements from other brokerage accounts, and other relevant documents which tend to prove your claim.
Securities arbitrations are conducted in the same manner that a court trial is held. There are opening statements; examination of witnesses, evidence is introduced by the claimant and by the respondents, and closing arguments. It is a formal proceeding and the arbitrators are typically attorneys, retired judges, and industry professionals who are skilled in the handling of evidentiary objections. Awards typically take one week before they are published.
Mediation is a less formal, voluntary process in which a person trained in dispute resolution techniques, can help the parties reach a mutually acceptable agreement. Mediation is an alternative to having your case decided by arbitrators at final hearing. Mediation is non-binding, less costly than arbitration and has a high success rate. The mediator does not impose a solution but rather works with the parties to create their own solution. Mediated solutions often include relief not available in arbitration or litigation. Parties can agree to opt into mediation at any point of the arbitration process.