Investors who lose money as the result of careless mistakes or intentional fraud by their stockbrokers or financial advisers may be eligible to recover their losses through a process known as stockbroker arbitration.
Arbitration claims can involve all types of investments, including stocks, bonds, annuities, and mutual funds.
Most customer claims against stockbrokers and financial "advisers" or "consultants" are required to be brought in arbitration before the National Association of Securities Dealers or the New York Stock Exchange rather than in court. The cases take about one year to complete and are decided at a hearing before either one or three arbitrators, depending on the size of the claim. Hearings are held throughout the United States.
Some types of claims that may result in financial awards to investors include:
- Churning of account: Churning is excessive trading of an investor's account in order to generate broker commissions.
- Suitability violations: These claims arise from recommendations by a stockbroker or "financial advisor" that result in losses in your account from investments that were not appropriate for your risk tolerance, overall financial situation, or investment objectives. Suitability claims frequently involve recommendations by stockbrokers to invest all of an investor's money in stocks, to borrow money from the brokerage on margin, or to invest heavily in a single stock or mutual fund or a small group of stocks.
- Negligence: A stockbroker has a duty to manage accounts and carry out customer instructions with reasonable care. Investors may have claims for recovery where stockbrokers, "financial advisers" or brokerage firms do not exercise reasonable care.
- Options "Exercise and Hold" /Failure to Diversify: During the heights of the technology stock market boom ending in 2000-2001, many stockbrokers advised employees who held substantial amounts of options on employer stock to exercise the options by borrowing money from the brokerage, and to then hold the stock for at least one year in order to qualify for long-term capital gains treatment. This strategy was in most instances very unwise because it exposed the investor to the possible loss of a substantial portion of his or her net worth in the event that the company's stock share price fell. Additionally, many brokers overlooked or failed to recommend strategies known as "zero cost collars" and "variable prepaid forward contracts" to investors whose investments in employer stock could have been safeguarded via utilization of these strategies. Many investors suffered substantial losses because of brokers' poor advice to "exercise and hold" and/or failure to recommend diversification and/or appropriate hedging strategies.
Stockbroker Arbitration Articles
Investors Use Stockbroker Arbitration to Recover Lost Funds
More and more investors are learning that, if their stockbroker acts inappropriately in giving investment advice, they can turn to stockbroker arbitration to regain their lost money. In fact, many investors have a clause in their paperwork that requires them to use stockbroker arbitration to settle investment claims.
Stockbroker Arbitration: Changes in the Wind
When a trusted stockbroker simply misfires when managing your investment, or worse—suddenly turns into a thieving, conniving and untrustworthy thorn in your side, stockbroker arbitration is a good way to ensure that your interests are protected, and that losses incurred as the result of alleged mismanagement of your portfolio are recoverable.
Stockbroker Arbitration: Clients Try to Reclaim Lost Investments
Tom W. says that his foreign exchange trader lost approximately $75,000 in one day. Now, Tom has filed a lawsuit against the trader alleging that the trader's negligence caused huge losses to his account. Many other investors are also filing lawsuits or filing for stockbroker arbitration, alleging that their investment advisors acted inappropriately when dealing with their accounts.
Former UBS Employee and a Stock Trader Come Clean on Dirty Dealings
Michael S. Guttenberg, a former employee for UBS AG along with David Tavdy have pleaded guilty to a plot surrounding stock trading utilizing insider information. The information was in regards to upgrades and downgrades of stock of analysts working for UBS. Both Guttenburg and Tavdy plead guilty to the charges alone in separate incidences by no one else's prompting. The guilty pleas from Guttenburg and Tavdy arrived a few short days before they were to appear on trial.
Stockbroker Arbitration: Don’t Get Burned. Get Even
Investing is sometimes a risky business, and can result in stockbroker fraud. Investment risk is normally mitigated with the help of a stockbroker who understands your particular risk tolerance, and manages your portfolio with prudence and pride.
Complainants Awarded in Stockbroker Arbitration Cases
Stockbroker Arbitration: Investors Concerned About Suitability Violations
New Rules Proposed for Stockbroker Arbitration Cases
Arbitration Panels Award Damages in Stockbroker Complaints
Stockbroker Arbitration: Recovering Losses for Investors
Investors Turn to Stockbroker Arbitration
Stockbroker Arbitration: Investors should not be Ashamed of Losses
Stockbroker Arbitration: Investors Can Recover Their Losses
Elderly at High Risk for Stockbroker Fraud
Stockbroker Arbitration: Always Do Your Research
Stockbroker Arbitration: When Class Action Lawsuits are Best
Stockbroker arbitration: Stockbroker Churns Children's Accounts
Stockbroker Arbitration claiming Improper Trading Strategies
Stockbroker Arbitration: Protecting Yourself
Stockbroker Arbitration in the News
JAN-14-08: A Willoughby broker has pleaded guilty to
securities fraud and making false statements. He admitted to helping two other men inflate stock prices. [
HERALD: STOCKBROKER]
OCT-22-07: Robert McNamara, a former
stockbroker whose license was revoked in 1991, was found guilty of racketeering, conspiracy to commit racketeering, communications fraud, grand theft, loan broker fraud and money laundering in a recent jury decision. [
JOURNAL: STOCKBROKER]
AUG-05-07: Investors have filed
arbitration claims against a stockbroker's former employer saying the broker sold them risky investments that were unsuitable for them. The investors say they wanted low-risk investments but were steered to high-risk investments with risks that were never properly explained. [
JOURNAL: STOCKBROKER ARBITRATION]
JUL-04-07: An
arbitration panel awarded six people compensation for money they lost after buying bad investments from a financial advisor who was indicted for fraud. The investors were awarded a total of $872,496.32. [
NOW: STOCKBROKER ARBITRATION]
JUN-05-07: A
stockbroker pleaded guilty to mail fraud related to a scheme in which he made false representations to convince people to give him money to invest. He actually used the money to pay his personal expenses and for gambling. [
NEWSWIRE: STOCKBROKER ARBITRATION]
MAY-08-07: The FDLE is investigating a former
stockbroker after allegations that he defrauded clients out of nearly $8 million in investor funds. [
GAZETTE: STOCKBROKER ARBITRATION]
APR-27-07: A judge has ordered a
stockbroker to pay $114,200 to compensate investors after he defrauded them. According to the Idaho Department of Finance, the broker misappropriated funds that customers gave him to invest. [
BUSINESS REVIEW: STOCKBROKER ARBITRATION]
MAR-20-07:
Crooked stockbroker and co-defendant, Brian Christensen, accused of defrauding seniors into giving their money to All School Kids. [
HERALD TRIBUNE: STOCKBROKER FRAUD]
Law Office of Christopher J. Gray, P.C. typically handles investor arbitration cases on a contingency basis. If there is no recovery or settlement, there is no attorney's fee charged. However, the firm in most instances requires that the investor pay for the filing fee and other out-of-pocket expenses.
Register your Stock Loss Case
If you have suffered stock losses as a result of stock broker negligence such as listed above, please click on the link below to send your complaint to a stock lawyer who will evaluate your case at no charge.
