Things You'll Need:
- statements
- order tickets
- investment marketing material
- correspondence
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Step 1
First listen to your gut. Do you think your broker listened to you and had your best interests in mind or do you think he was driven solely by commission. If you lost a significant amount of money you may have been a victim of stock broker fraud and may have a claim for recovery.
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Step 2
First look through all the transactions on the account. Find out if you lost more money than what the S&P 500 index during the relevant time period. However this isn't the sole indicator if you can recover. Different investors have different risk thresholds and your profile may be coded as "conservative". You can find your risk tolerance in most instances on your statements. If you feel you were defrauded proceed to step two.
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Step 3
Most all securities disputes are subject to mandatory binding arbitration. This clause can be found in your account opening documents. Rather than having their disputes decided by a judge and jury, participants to arbitration proceedings have their dispute 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. One of the most important legal aspects of arbitration is that arbitration awards are final and binding, subject to review by a court only on a very limited basis.
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Step 4
Commencing an Arbitration
Arbitrations are commenced by filing a statement of claim within the applicable arbitration forum, together with a submission agreement and the required fees. The fees with the Financial Industry Regulatory Authority ("FINRA") can range from $475 to $1,800 depending on the amount in controversy. Prior to filing the Statement of Claim, a good attorney will advise the client to have an initial damage analysis performed by a forensic accountant, which typically ranges from $500 to $2,500. Depending on the nature of the case a damage analysis may not be necessary. An expert in the securities or investment field may be retained to testify at the final hearing depending on the complexity of the case. We accept cases on a contingency fee basis meaning we do not get paid for our time we only get paid in the event of a recovery. However, clients are responsible for the costs of prosecuting their case. More information about this step can be found on my website http://www.StockMarketLawsuit.com. -
Step 5
The Statement of Claim
The Statement of Claim, may be in narrative or pleadings form. The Statement of Claim must 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 sought, and the relief sought. -
Step 6
Hearing Location
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. -
Step 7
Prehearing Discovery
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. -
Step 8
Hearing Procedures
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. Last year 38% of investors won any recovery (can be $1.00). These odds are not good. This is why it is necessary to hire an attorney who regularly practices before FINRA's Board.
