Consult with a lawyer who is
experienced in representing investors. Many people with valid claims never
recover because they believe the losses are their own fault, it's too late to
bring a claim, or that documents they have signed bar recovery.
A knowledgeable attorney will examine and advise you on the following issues:
Has some form of recognized
Did such misconduct cause an
How much money can you hope to
What is your proof of both the
misconduct and the loss?
Do you have a choice between
court and arbitration?
How much will it cost to pursue
How likely is it that your
claims are barred by time limits?
Will you be able to collect any
award or judgment?
Most investor arbitrations
take place under the rules of the National Association of Securities Dealers,
the New York Stock Exchange or the American Arbitration Association, and are
conducted by a panel of three arbitrators. Once your claim is filed, the NASD
will attempt to serve it on the defendants, who have 45 days to file their
responses. After that, the parties usually draft and serve each other with
requests for information and relevant documents.
Hearing dates are usually scheduled 12-18 months after the claim is
filed, and are normally held at a NASD location closest to the claimant's
residence. Before the hearing, the parties or their lawyers often submit
briefs containing their factual and legal arguments. After any pre-hearing
motions are decided, the parties or their representatives make opening
statements, and the claimant puts forth his case calling witnesses,
testifying, and offering exhibits. As in a trial, all parties have the right
to cross-examine each other's witnesses and (with the panel's permission)
conduct redirect examination. In addition, the panelists may ask their own
questions. After the claimant has presented his/her case, the respondents
present theirs. All parties have a chance to make closing arguments.
The hearing can take anywhere from one day to several weeks. When it
is concluded, NASD sends copies of the written award to the parties. If the
investor wins an award, the member firm or associated person must pay
promptly or face disciplinary action.
Obviously, it pays for any investor, aggrieved or not, to preserve
every scrap of paper or piece of correspondence associated with their
account. Original documents, statements, and correspondence are far superior
to copies, particularly because both customers and brokers tend to make
handwritten notes on the originals.
Most arbitrators are accustomed to hearing conflicting testimony.
Therefore, arbitrators usually analyze any documentary and circumstantial
evidence to reach their decision. The best thing an aggrieved investor can do
is to become thoroughly conversant with every detail of his case. Arbitrators
place a premium on truthfulness, and are far too experienced to give credence
to unsupported claims. Investors can help their cases by making
contemporaneous notes and keeping diaries of all discussions with their
broker, and by confirming every representation, promise, or guarantee in
writing to the broker and even the branch manager.
Keep in mind: your previous conduct constitutes circumstantial
evidence, and could be vital to your claim's success. An investor who took no
reasonable steps to protect his/her financial interests will probably be
judged as having ratified (or even adopted) the kind of misconduct practiced
by the defendant. It is especially helpful to establish chronologies that
demonstrate connections between a loss and the broker's actions. Locate phone
bills, receipts, or notes that substantiate your conduct, illustrate your
level of investor sophistication, or show your lack of control over