Frequently Asked Questions
How do I bring a claim against my broker?
If you have a claim against your broker for most cases the forum is FINRA Arbitration. When you signed up for your account, you likely signed an agreement that said you would resolve any disputes through binding FINRA Arbitration.
What do the lawyers fees cost?
We only get paid if we recover for you. For almost all cases the fees will be 1/3 of anything that is recovered for you.
Are there other expenses for me?
Yes, though they are typically small. Unlike a court case, there not significant costs incurred in a typical FINRA arbitration. The main costs are the filing fee and any expert analysis/testimony. The costs will vary from case to case. In some cases, arrangements can be made for us to advance those costs, but it usually results in a higher % of the fee being required as our fee, as we will be taking on more risk of the case.
What do I have to do?
Other than hire counsel to help you bring your claim, your main responsibilities regarding the case will be to help us understand the facts at issue, provide documents required in FINRA Arbitration (tax returns, account statements, communications with your broker, etc.), and attend the Final Hearing to provide testimony if the case does not settle before the final hearing. There will be no other hearings that require your attendance.
Will there be a trial?
If the case does not resolve via settlement (as most cases do), then there will be a trial that is called a Final Hearing. They are typically 4-5 days in which we will present your case to a panel of three arbitrators. Witnesses will provide testimony (typically you the Claimant, our expert, the broker, a supervisor from the broker-dealer the broker worked for, and the defense expert) and be cross examined.
How long will it take?
FINRA states that its goal is to complete all claims within 12 months of filing. Our experience that an expectation of 18 months is more likely.
What can I expect as a result?
Every case is so different that it is widely variable. However, most cases reach a settlement before any kind of a hearing. We put a lot of effort into evaluating cases before taking them on, as our commitment of time on these cases is significant, and thus while it is possible you will not receive any recovery, we only take cases we believe have merit.
What kind of Claims can I Bring?
While there are lots of different claims that might apply to your case and facts, the most common claims in FINRA arbitration are:
- Misrepresentations, Customer Specific and Reasonable Basis Unsuitability. Brokers have a duty to tell the truth in their sales pitch, and ensure any recommendations are not just appropriate for each specific client, but that the investment or strategy is appropriate for any investor. Example, we represented a high net-worth individual who was sold a private placement via memorandum for a product which was not suitable for him nor had the placement agent sufficiently investigated the company underlying the product to justify the risk/return offered, meaning it was not suitable for any investor. We obtained a substantial recovery for the client.
- Breach of Fiduciary Duty. Any party that is exercising discretion over an account (choosing what is bought and sold) has a fiduciary duty to put the clients interests ahead of their own. Example, we represented the beneficiaries of a Trust in which the broker, while exercising discretion over the account, mismanaged the Trust’s funds by leaving the investments primarily in equities despite an obligation to protect funds for specific bequests set forth in the Trust. There was also a claim against the corporate trustee for failure to properly discharge its duties. We obtained a substantial settlement and recovery for the client.
- Uniform Securities Law Violation. Many states have adopted the Uniform Securities Law which imposes additional civil liability for any misrepresentation or omission in the sale of a security. Example, we brought a case for misrepresentations and unjust enrichment in the sale of a Tenants in Common interest for commercial real estate and obtained a substantial recovery for the client based on misrepresentations in the sale.
Do I have to get my broker in trouble?
Often the claim being brought is just against the Broker-Dealer that the broker or advisor was affiliated with. It is not uncommon that a broker or advisor was merely following the instructions or incentives set forth by the company s/he was affiliated with, and thus the only named party will be the broker dealer. It is really a case by case analysis, but something that can be reviewed and discussed before a claim is brought.
“At The Securities Lawyers, you get hands-on involvement from a partner level attorney. If I'm on your case, there will be associates and paralegals assisting, but I will be the one trying your case, negotiating settlements, and mediating your case.” Sean M. Sweeney