What can I do if I am unsure about whether I have a valid claim?

The first thing you should do is to take our test to determine whether you may have been the victim of fraud or other misconduct. If you believe you may have been the victim of securities fraud, you should contact an experienced attorney who will evaluate your case and advise you on your options.

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What is securities arbitration?

In 1987, the U.S. Supreme Court held that brokerage firms could enforce pre-dispute arbitration clauses contained in their standard form customer agreements. Virtually all brokerage firms' customer agreement forms now contain arbitration clauses.  As a result, most disputes between brokerage firms and customers are arbitrated. Arbitration is a private dispute resolution process in which three arbitrators are appointed to decided the merits of a case. One of the arbitrators is required to be associated, presently or formerly, with an NASD member. The purpose of having an "industry representative" on the panel is to assure that the panel will have the expertise and experience necessary to understand the transactions and practices involved in the case. The other two panel members are typically business persons, such as lawyers, accountants, investors or retired judges, who have an interest in securities or dispute resolution. In an arbitration, the parties are typically represented by counsel and present evidence through testimony and documents like in a court proceeding.

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Who sponsors securities arbitration?

The largest sponsor of securities arbitration is the National Association of Securities Dealers, Inc. ("NASD"), which is a self-regulatory organization whose members are brokerage firms. The NASD has been granted authority by Congress through the Securities and Exchange Commission to regulate its members and individual brokers. Other organizations, such as the New York Stock Exchange, also conduct securities arbitrations.

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What are the advantages of securities arbitration?

Arbitration has a number of advantages. Arbitration is generally less time consuming and less expensive than court, due to the fact that the deposition discovery and motions practice is rare in arbitration. Pre-hearing procedures are more limited in arbitration than in court, and arbitrations are typically resolved in 12 months as opposed to 18 months to two years or more for court cases. However, unlike court, formal rules of evidence and procedure are inapplicable, and therefore the process is often more streamlined and less contentious. Many arbitration hearings are resolved in less than two full days of hearing time.

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What are the disadvantages of securities arbitration?

The most significant disadvantage is that the parties give up their right to trial by jury. In addition, the parties do not have the procedural and evidentiary protections provided through our court system. Limited discovery can be disadvantageous. Arbitration requires the payment of significant filing and hearing fees.

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How long does the process take?

Court cases typically take from 18 months to two years or more. An advantage of arbitration is that cases are resolved more quickly, generally within 12 to 15 months.

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Do investors ever win in arbitration?

Yes. According to a recent study by the U.S. General Accounting Office, customers are successful in being awarded some damages in approximately 55% of the cases that are decided by an arbitration panel. In addition, approximately 50% to 60% of the cases that are filed are settled before an arbitration decision is rendered.

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Should I contact my broker-dealer about settling the case?
Experience has shown that brokerage firms are generally unwilling to make settlement offers before a claim has been filed. Brokerage firms sometimes seek to delay matters by suggesting that the customer write a complaint letter. After receiving the letter, the firm then spends considerable time "reviewing" the matter prior to denying the claim some months later by means of a terse, non-responsive letter. We recommend that customers not write complaint letters to their brokerage firms without the assistance of a lawyer. Such efforts rarely bear fruit, and while time is passing the statute of limitations continues to run.

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Can the regulatory authorities assist in recovering losses?

The regulatory authorities, such as the SEC, the NASD and state securities regulators, are in the business of enforcing their rules and regulations through disciplinary processes. They are not set up to help individual customers recover their losses, and efforts to enlist the assistance of regulators is often a source of significant delay. We do encourage our clients to cooperate fully with law enforcement authorities and regulators, and to report misconduct where appropriate, but such contacts should be done in consultation with the lawyer.

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Does it matter when I made the investment?

Yes. It is to your advantage to act quickly if you believe your money has been mishandled. In addition, if you allow too much time to pass your claim may become barred by the applicable statutes of limitations. Contact us if you wish to receive more information about statutes of limitations.

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