Frequently Asked Questions
Here are a few questions about bringing an action against your broker and his or her firm that may be on your mind and may help you decide what to do:
Q. How does a person arbitrate?
A. Arbitration is just like an informal trial except there are arbitrators instead of a judge or jury. They hear the arguments and evidence of both sides of a case, and decide the merits of it. The arbitrators may include attorneys, accountants, laymen or other professionals. Unlike court proceedings, arbitration usually doesn't involve depositions, motions, or appeals. It's usually much faster and cheaper than civil court. It usually takes around 12 months from filing to first hearing.
Q. What is an arbitration clause?
A. Almost all securities brokerage firm will provide you with a standard new account form containing a clause that requires you to pursue any grievance through arbitration proceedings instead of the court system.
Q. Who conducts the arbitration proceedings?
A. Usually:
The National Association of Securities Dealers, Inc. (NASD)
The
The American Arbitration Association (AAA)
Q. What are the costs?
A. The larger your claim, the greater your filing and administrative fees. If the case settles, a portion of this fee might be returned. The average NASD filing fee is about $1200.
Q. Are there other costs?
A. We retain experts to testify in your behalf and usually do a portfolio analysis of your holdings. Since we are your lawyers, we cannot testify. These experts charge by the hour, and represent an important part of your evidence. The time they spend will determine the fee they charge and you are responsible for those charges. We also will charge you for photocopies, postage, messenger services, etc. We try not to spend your money indiscriminately and we understand that you have already lost money, but remember, it’s your case. We do not charge you for our initial consultation.
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Q. How do we charge you?
A. We work on a contingency fee that is set by a contract between us; usually a percentage of the recovery. We do not charge you a fee if we do not recover anything. You are only responsible for costs.
Q Do I have a chance to win? What are the odds?
A. About 80% of all customer cases settle in favor of the investor before to the rendering of an award. About half of the remaining 20% that do not settle prior to arbitration result in an award to the customer. We can’t guarantee that there will be a recovery in any arbitration proceeding. But if we take your case, we think there is a good chance that you will recover, because we do not want to work for free!
Q. What will happen? Will my privacy be invaded?
A.. You probably will have to produce copies of your financial records and tax returns and also answer many other questions, because the respondents will try to prove they were not responsible for your decisions and other questions about your background and experience that you will probably have to answer. You must decide if you want the broker to get away with his or her conduct and the way he or she treated you. You decide if you want to go ahead.
To help us evaluate what you need to bring this type of claim, click here.
Disclaimer: Our website is for informational purposes, to help you decide whether to chose us as lawyers, it should not be considered legal advice, and you have not hired us until you sign a contract. Please also note that there is a statute of limitations concerning investor claims against brokerage firms, so you need to file your case as soon as possible.