Investment Recovery Steps

If you suspect that there may be a problem with the way your broker has handled your money, we recommend these steps to protect yourself.

Document your case

• Keep records (Monthly statements and all trade confirmations)
• Written statements, etc.
• Read your account form.
• Maintain all correspondence with the financial firm, including e-mail.

Click here for advice on documenting your case.

Research the regulations

NASD Resources
SEC Resources

Do not contact the brokerage company in writing

Anything you state in writing will be used by the brokerage firm against you. Brokerages encourage upset investors to write letters, which they use to limit damages in later proceedings. This includes e-mail correspondence.

Brokerage firms have learned that if they ignore a complaint letter, the problem will most likely go away. Unfortunately, suing them through the arbitration process seems to be the most effective way to get their attention.

Contact a Self-Regulating Organization's Division or Department of Arbitration

The securities industry's trade groups help resolve disputes between investors and the industry. The biggest SROs are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD). They both have arbitration departments/divisions.

Contact either one and ask for the forms requesting an arbitration.

Contact an attorney

It is generally best to hire a lawyer that specializes in securities law and investor protection. An experienced attorney has prepared arbitration cases before, and he or she is familiar with the process. Some law firms employ former brokerage employees or regulatory agency employees, so they have intimate industry knowledge. Some firms represent both sides while others represent only investors. Finding a securities lawyer.

Do not contact the regulatory authorities

Filing a complaint with the SEC or NASD will not get your money back. All it will do is trigger a cursory investigation in which the brokerage firm will receive a copy of your complaint. The regulatory agency will then likely issue a letter concluding that they could not find any rule violations and refer you to arbitration. The brokerage firm will then use that letter against you in the arbitration.

The Arbitraton Process

Arbitration Steps

1) A Statement of Claim is filed with the (usually the NASD or the NYSE), setting forth the claims against the broker and/or brokerage firm.

2) A response, provided by the broker and/or firm.

3) The Discovery phase, in which both sides may request documents deemed relevant to the dispute.

4) The hearing, where the parties present their respective sides of the dispute to the arbitration panel will take place approximately one year after the claim is filed. The panel is usually composed of three individuals, two of whom are public arbitrators not affiliated with the securities industry and one who is so affiliated.

5) Determination by the arbitrator whether the Claimant should be reimbursed for the losses sustained and/or recover additional damages. The determination will spell out what money will be paid and by what time (usually 30 days).

Who are the arbitrators?

Arbitrators are generally experienced business people with a knowledge of the security industry and accepted standards of conduct. One of the arbitrators is always an employee of the securities industry.

Who should one sue?

Many investors know that they have been wronged, but have a hard time identifying who is at fault. Brokerage firms frequently try to make the stockbroker the scapegoat, but you can sue the brokerage firm, independent investment advisors, and even directors of companies. An experienced law firm can help identify who to file claims against, and it is often a good idea to sue more than one party.

How we can help

The SEC, NASD and Securities Law Information Center works with investors who have lost money because of the way that their brokers have managed their accounts. We work with our clients to build a strong case for an investor to present to arbitrators, whether directly or through an attorney. Please fill out the form below for a free consultation so that we can best explain what we can do for your particular situation.