I have been representing purchasers and brokers in securities arbitration matters since 1982. In those 25 years I have handled over 500 securities arbitration cases, and have taken well over 150 cases to hearing. Since securities arbitration is a giant part of my practice, I also survey all the arbitration awards that are entered in matters across the country, write columns for backers and brokers on the topic, and stay well informed on developments in this unique area of law.
It my work and studies, it is clear that disputes with stock brokers fall into very well outlined classes of claims, which we may disuss here, and which I originally discussed in the 1st version of this column. With the fall of the Net, momentum and technology stocks in April 2000, the arbitration forums have seen an increase in arbitration filings, and the emergence of a new class of claim, for over-concentration, or neglecting to diversify.
As the markets improved in 2003, thru 2007, we saw a sharp decrease in the quantity of settlement filings, and less than 4,000 claims were filed in 2007. Given the indisputable fact that there are more than 600,000 registered delegates in the country, the complaint to registrant ratio is rather good.
The details of securities arbitration are covered in another article, Overview of the Securities Arbitration Process which explains the arbitration process itself, and Intro to the Federal Instruments Laws gives a foundational rationalization of the stocks laws that are applied in arbitration. The focus of this piece is the type of claims, or the typical complaints that buyers bring in arbitration.
The securities professional is smart to be conscious of these types of claims, for the claims put the law into application, and highlight what a manual of rules and compliance procedures can't - brokers have a requirement to deal reasonably, honestly and openly with their clients, and are liable for a selection of offenses if they don't do so.
That said, the reader is warned that just because portfolio has suffered losses, a broker is not necessarily liable to the buyer. Any kind of investment has a risk concerned, and that risk is that the stocks will decline in value. Similarily, simply because a broker has been charged with wrongful conduct by a customer, that is in no way the same as a finding of wrongful conduct. Actually due to the ease at which an arbitration can be commenced and maintained, in my experience there is a higher share of silly and groundless claims brought against broker dealers than any other group of professionals. It should be further noted that approximately 50% of all customer claims that go thru a settlement hearing are really won by the buyer.
It my work and studies, it is clear that disputes with stock brokers fall into very well outlined classes of claims, which we may disuss here, and which I originally discussed in the 1st version of this column. With the fall of the Net, momentum and technology stocks in April 2000, the arbitration forums have seen an increase in arbitration filings, and the emergence of a new class of claim, for over-concentration, or neglecting to diversify.
As the markets improved in 2003, thru 2007, we saw a sharp decrease in the quantity of settlement filings, and less than 4,000 claims were filed in 2007. Given the indisputable fact that there are more than 600,000 registered delegates in the country, the complaint to registrant ratio is rather good.
The details of securities arbitration are covered in another article, Overview of the Securities Arbitration Process which explains the arbitration process itself, and Intro to the Federal Instruments Laws gives a foundational rationalization of the stocks laws that are applied in arbitration. The focus of this piece is the type of claims, or the typical complaints that buyers bring in arbitration.
The securities professional is smart to be conscious of these types of claims, for the claims put the law into application, and highlight what a manual of rules and compliance procedures can't - brokers have a requirement to deal reasonably, honestly and openly with their clients, and are liable for a selection of offenses if they don't do so.
That said, the reader is warned that just because portfolio has suffered losses, a broker is not necessarily liable to the buyer. Any kind of investment has a risk concerned, and that risk is that the stocks will decline in value. Similarily, simply because a broker has been charged with wrongful conduct by a customer, that is in no way the same as a finding of wrongful conduct. Actually due to the ease at which an arbitration can be commenced and maintained, in my experience there is a higher share of silly and groundless claims brought against broker dealers than any other group of professionals. It should be further noted that approximately 50% of all customer claims that go thru a settlement hearing are really won by the buyer.
About the Author:
This above article about securities arbitration and FINRA arbitration is subsidized by seclaw dot com revised by James Marbury.
