Stockbroker Arbitration: Investors Can Recover Their Losses

Minneapolis, MNInvestors who lose money as the result of improper actions on the part of their stockbroker can get legal help through stockbroker arbitration to recover their losses.

Simply losing money on an investment does not mean that an investor has a complaint against a broker. However, if a broker has not acted in the best interests of his client, the client can seek to recover money lost as a result of the broker's actions.

In April 2007, a judge ordered a former stockbroker to pay $114,200 in restitution to investors whose money he misappropriated for his own use. The Idaho Department of Finance alleged that the broker did not register his company with the department, which is a violation of Idaho law.

In December 2006, three investors were awarded $9.3 million after an arbitration panel found that their stockbroker mishandled their savings. The broker put the savings in mutual funds that had high fees and high trading costs. The investors had also claimed the stockbroker was guilty of negligence and breach of fiduciary duty. According to the arbitration panel's decision, the broker and the brokerage unit that he worked for were liable for $3.8 million in compensatory damages, $3 million in punitive damages, and $2.5 million in costs.

Earlier in the same year, Ameriprise Financial Inc., a company that offers financial planning and advice, agreed to settle a claim brought by 32 former Exxon Mobile Corp. employees who argued that their broker persuaded them to retire early by cashing out investment plans and reinvesting with Securities America, a subsidiary of Ameriprise. Ameriprise will pay $16.3 million to the former Exxon employees including $2.5 million for failing to properly supervise the broker involved in the claim.

A stockbroker's job is to keep a person's financial situation and goals in mind when making investment recommendations. Even though a stockbroker may recommend a legitimate investment opportunity, that opportunity might not be suitable for every investor. Stockbrokers must also discuss potential investments with the client before making an investment on the client's behalf.

Investors who have concerns about how their stockbroker handled their money can file for stockbroker arbitration. Typical complaints include unsuitable investments, churning, unauthorized transactions, and excessive mark-ups. Monetary awards given can include compensatory damages, interest on losses, market-adjusted damages, lost profit, attorney's fees, and punitive damages.

If you feel your stockbroker has not acted in your best interests, contact a lawyer to discuss your options.