Whether you lost your entire life savings or a percentage of your investments, you deserve to know what went wrong. Did your broker make unsuitable investment recommendations? Did your portfolio have the proper asset allocation? Could you have lost money simply because your broker was negligent? If your broker was to blame, you may be able to recover your investment losses. The majority of broker disputes are handled in mandatory securities arbitration, where a panel of arbitrators hears your case. The panel’s decision is considered final and binding.
Determining If You Have a Case
The first step in recovering your investment losses is determining if you do, in fact, have a valid case against your broker. Broker misconduct can come in numerous forms; however, just because you lost money in an investment does not mean that you will be entitled to recover your losses. Therefore, it is imperative to consult with an attorney who can review the details of your case.
Some of the key aspects that will need to be reviewed include:
- Your investment goals
- Your investment experience
- Information provided by your broker
- The activity in your account
- The amount of your losses
- What happened to your investments
Actions You Can Take to Recover Your Losses
There are some actions you can take to improve the chances of recovering your losses:
Gather documentation related to your claim
Maintain all records of your investment account, including regular account statements, written correspondence with your broker and trade confirmations. You should also document any communication you have with the brokerage firm, including calls and emails.
Attorney Dave Meyer provides more information on gathering the necessary documents in this video.
Refrain from writing a complaint letter to your broker
Your first instinct might be to attempt to resolve the discrepancy directly with your broker. The problem is that anything you send, whether a mailed letter or e-mail, can be used against you. It is crucial that you avoid any action that could damage your claim.
Contact an experienced securities arbitration attorney
When you make a claim, the brokerage firm will employ the assistance of their legal team. Their lawyers will do what they can to avoid liability for your losses. You need to ensure that you have built a strong case, which can be accomplished by working with a skilled lawyer.
Understanding Arbitration Proceedings
To recover investment losses, you will have to file an arbitration claim with the Financial Industry Regulatory Authority, Inc. (FINRA). Filing a complaint with the Division of Securities is a useful first step; the Division does not have the authority to recover funds on behalf of investors. An arbitration proceeding through FINRA typically has four phases, which are all explained below.
Phase #1: The Filing of the Statement Claim
Your securities arbitration attorney will file a "Statement of Claim" on your behalf. This claim will detail your version of the facts related to your securities dispute and a request for damages. Then, your "Statement of Claim" will be served on the broker or brokerage firm (referred to as the "Respondent") you're filing your claim against. The broker or brokerage firm will review your "Statement of Claim" and file a "Statement of Answer," which will contain the Respondent's version of the facts and a defense against your claim for damages.
Phase #2: Selection of Arbitrators
One to three FINRA arbitrators will be selected from a random, computer-generated list. The number of arbitrators selected depends on the amount of damages involved in the dispute. The higher the dollar amount, the more arbitrators will be selected. Once the arbitrators have been selected, a prehearing conference will be held. At the conference, your attorney, the Respondent's attorney, and the arbitrators set the date for the final hearing and make decisions about procedural matters related to the claim, such as the schedule for discovery.
Phase #3: Exchange of Information
Your attorney and the Respondent's attorney will exchange information and documentation regarding the facts and circumstances of your dispute. If you and your attorney decide it is a good idea, you may decide to mediate the dispute with the goal of reaching a settlement. If a settlement cannot be reached, your attorney will continue preparations for the final hearing.
Phase #4: Final Arbitration Hearing
Your attorney will present your version of the dispute, and argue against the Respondents' version, at the final arbitration hearing. After the arguments are presented, the arbitrators will meet and render a final decision, typically within a period of 30 days. Once the decision has been reached, notice will be given to everyone involved. If the arbitrators decide in your favor, and include an award for damages in their decision, the broker or brokerage firm typically has 30 days from the date the award is issued to pay you. The entire recovery process can take anywhere from about 10 months to a year-and-a-half.
Finding the Right Law Firm to Recover Your Losses
An attorney can be invaluable to the success of your case. Yet, finding the right law firm to handle your claim is not that simple. Not every firm is equipped to represent claims against brokers, so you do need to do your homework. When deciding on which firm to hire, consider the following:
- Firm’s experience and expertise
- Whether the law firm has the necessary resources to help you
- Overall reputation of the firm
- Amount of cases successfully resolved
About Meyer Wilson, LPA
Our securities arbitration attorneys represent investors nationwide in stockbroker mediation, arbitration and litigation claims. We have won jury verdicts, arbitration awards and settlements of hundreds of millions of dollars for investors across the United States. For a free case evaluation, contact our law firm by calling toll-free (888) 390-6491 or filling out our online form.