Brokerage Firms Attempt to "Starve Out" Investors Through Appeal of FINRA Awards

FINRA arbitration panels are siding with investors more and more frequently, but a favorable award from a FINRA arbitration panel doesn't necessarily translate into immediate payment for the aggrieved investor. It seems that a rising number of brokerage firms are beginning to fight their FINRA arbitration losses in appeals court, in the hope that investors will run out of patience - and money - during the lengthy process and settle for much less than the original award amount ("(Non)Binding Arbitration," Dow Jones Reprint: Wall Street Journal, April 4, 2011).

Take former professional basketball star Horace Grant for example. Or, actor Larry Hagman. Both men were awarded over a million dollars in damages in FINRA arbitration claims over the past couple of years and neither got timely paid on the fulll award (Grant = $1.5 million; Hagman = $11.6 million)., A California state court threw out the FINRA award in Hagman's claim against Citigroup, Inc. Following an appeal of that ruling by Hagman, the parties have reportedly reached a settlement. Morgan Keegan & Co. Regions Financial Corp. unit is betting a federal court will reverse the FINRA award in Grant's case, which is currently in appeal.

As reported in the article, while investors are typically required to settle disputes with financial firms and broker-dealers through the FINRA mandatory and binding arbitration process, the panel's decision can be appealed under limited circumstances.

Mr. Grant says firms like Citigroup and Morgan Keegan use the appeals process to "starve you [investors] out so that you can settle with them." While Morgan Keegan (according to the article) denies Mr. Grant's claim and says the firm uses the appeals process only to reverse a "miscarriage of justice," the spokeswoman did admit that appeals are filed in approximately 15 percent of the firm's lost cases.

About our law firm:

The law firm of Meyer Wilson represents individuals across the country who have been harmed by investment fraud. All of our cases are handled on a contingency fee basis and we never request a retainer. Contact us toll-free at 1.866.429.2360 for more information or complete the online form on the top of this page and we will respond promptly.