Securities arbitration results from the Financial Industry Regulatory Authority (“FINRA”) Office of Dispute Resolution reporting the outcomes of customer initiated investment related arbitrations against stockbrokers and investment firms has been released for 2009.

Not surprisingly, the number of FINRA customer initiated arbitration cases filed in 2009 increased 43% from 4,982 cases in 2008 to 7,137 cases in 2009. The number of these cases was initially expected to exceed 10,000 in 2009. Increases in securities prices in the 2009 have probably reduced the number of claims that would otherwise have been filed last year, given Wall Streetfs more recent misconduct, as the high tide conceals that the swimmers are wearing no clothes.

Last years filings are still behind the number of presumably “tech-wreck” related annual filings in 2002, 2003 and 2004. Securities arbitration claims involving misrepresentations and omissions continue to outpace the filing of cases alleging the sale of unsuitable investments, as it is expected these cases particularly in 2008 and 2009 relate to the fraudulent sale of the preferred securities of financial institutions, structured products, bond funds, and the near cash instruments that have been manufactured by Wall Street within the last two years and sold to unsuspecting otherwise conservative investors.

Indeed, FINRA reports a 318% increase in the number of securities arbitration claims filed against brokers involving preferred securities and a 128% increase in the number of securities arbitration claims filed involving fraud in connection with the sale of corporate bonds.

1 in 4 Cases Decided By An Arbitration Panel

Based upon the FINRA securities arbitration cases closed last year, at least 25%, or 1 in 4 of these cases were not settled or withdrawn, but were decided by arbitration panels. Of those cases decided by securities arbitration panels, investors prevailed only 43%, or less than half of the time, meaning that the chance or probability of not obtaining an monetary award or favorable outcome in an arbitration proceeding is greater than playing Russian Roulette, where only 1 in 6 times, the outcome does not favor the participant.

FINRA also reports that 7% or 310 of the cases closed last were cases “decided by arbitrators after a review of the documents,” but it is unclear if these cases were submitted to FINRA on the papers in simplified arbitration (i.e. claims for less than $25,000) or were cases dismissed by FINRA arbitration panels in advance of an evidentiary hearing. In 2009, the FINRA approved a proposal to limit significantly the number of dispositive motions filed in its arbitration forum and impose strict sanctions against parties who engage in abusive motions practices.

Although FINRA has again launched its “experimental” public arbitration pilot program allowing parties to be excused from the mandatory non-public, securities industry arbitrator required to render judgment on every arbitration panel deciding these claims involving more than $100,000, FINRA reports that of its qualified arbitrator pool, 43% or 2,696 of its qualified arbitrators are non-public arbitrators and are employed or have some significant tie to the securities industry.

If you have been the victim of investment fraud by your stockbroker or investment professional, contact us for a free evaluation at (877) SEC-ATTY. Many cases accepted on a contingency fee basis. For more information, visit our website at

Guiliano Law Group

Our practice 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 you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.