According to FINRA Dispute Resolution Statistics, so far in 2013, only 44% of investors bringing claims against their stockbroker or brokerage firm recover any damages, and on average, even those that win, only recover 50% of their damages.
Empirical evidence clearly demonstrates that “Better representation may lead to better outcomes.” The Influence of Arbitrator Background and Representation on Arbitration Outcomes. Stephen J. Choi, Jill E. Fisch, & A.C. Pritchard (July 16, 2012).
Investors Filing Arbitration Claims
However, by suggesting that investors can file “Do It Yourself” arbitration claims, FINRA, and its member, the financial industry, can be expected to see an improvement in industry results. According to a release made April 10, 2012, entitled: Resources for Investors Representing Themselves in FINRA Arbitrations and Mediations, “FINRA does not require parties to hire attorneys. However, you might consider hiring an attorney to provide direction and advice. If there is a hearing, all parties will have to question witnesses and present their cases. For cases that arbitrators decide on the papers without a hearing, you will be required to prepare written submissions for the arbitrator. Even if you do not hire an attorney, brokerage firms will likely be represented by an attorney.”
Of course, the “FINRA staff is neutral and cannot give legal advice to the parties. However, staff can answer procedural questions.”
Nonetheless, if you are unsophisticated enough to have been mislead by your broker or brokerage firm, you may be sophisticated enough to act as your own lawyer by drafting a legal complaint or Statement of Claim, sorting through the arbitrator selection process, preparing discovery requests, litigating discovery motions, and ultimately appear before an arbitration panel to make opening statements, examine and cross examine witnesses, and offer documents in evidence at a final hearing where the Rules of Evidence are of course not binding, but do offer guidance.
According to FINRA, the process appears to be simple: “Arbitration is an alternative to litigation in which two or more parties select impartial persons, called arbitrators, to resolve a dispute. FINRA arbitration panels have either one or three arbitrators depending on the amounts of damages claimed. Arbitrators read the parties’ pleadings, listen to the witnesses’ testimony and parties’ arguments and then decide the case. The arbitrators’ decision, called an award is final and binding.”
Differences Between Arbitration & Filing an Investor Complaint
FINRA notes that “there are important differences between arbitration or mediation on the one hand and filing an investor complaint on the other. These are independent and unrelated. Investors may also alert FINRA to potentially fraudulent or suspicious activities by brokerage firms or brokers, by using FINRA’s Investor Complaint Center. However, if you are seeking money damages, you must file an arbitration or request to mediate.”
Luckily, everything an injured investor needs to know about the process in order to Do It Yourself can be found here, and as FINRA notes, FINRA does not require parties to hire attorneys.
Guiliano Law Firm
The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Firm, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. If you own the common stock of TradeStation and purchased your shares before April 21, 2011, and wish to learn more about these claims, contact us at (877) SEC-ATTY