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Stockbroker Arbitration: Clients Try to Reclaim Lost Investments

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Dallas, TXTom 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.

"A year before the incident I thought I'd try this foreign exchange trader out," Tom says. "I gave him $11,000 to play with for a year. In that year he increased it by 20%, so I had $13,000. Then I decided to make another $87,000 contribution to bring the total to $100,000.

Investment Loss"The day before Thanksgiving, 2006, I lost $75,000. Most of the trades took around five to six hours. This time, they allowed the trade to go for a day and a half or so. It ran into Thanksgiving. I happened to be looking at the situation and saw the value of the account dropped by about 25%. I tried calling the company (Eurobrothers) but had difficulty getting in touch with anyone. So I left a message telling them not to trade on my account any longer.

"A fellow called me back and said, 'It's no big deal, don't worry about it.' But a couple of hours later the account had only a $50,000 value. I went online and filed a complaint with the Securities and Exchange Commission. I also again requested that they not trade this account any more. The fellow called me back and was more concerned this time but by the end of the day the account lost $75,000.

"In my opinion, the traders weren't at the office. They had taken off a day early and were not monitoring the trade. They were asleep at the wheel. They were negligent in controlling the situation and lost $75,000 of my money.

"I was not initiating my own trades—they initiated trades on my behalf. Over the first year they had probably somewhere between 12-20 trades—that's my estimate. They made money on all trades except two and that was to be expected. But there wasn't a big range on making or losing money, until they lost 75% percent of the account.

"I heard about them through telephone solicitation and got background information on the company. There was no explanation for why the money was lost. They just said it was normal within the risk of the situation. I feel that the trade was unusual in the amount of money that was lost and because the trade went on for so long and kept racking up loss after loss after loss, without them stopping the situation.

"I don't know that I have any real words of wisdom for those in the marketplace. There is some risk, especially in allowing someone else to trade your money. Risk can be material or immaterial. In this case it was material for me. I can't tell you what was running through their mind that day. My opinion is they initiated the trade and didn't manage it properly because of the holiday. That's my opinion. They may make some sort of other case that the account was closely managed the whole time but I can't see how."

Many investors are filing lawsuits or arbitration claims alleging that improper actions on the part of the stockbroker or investment advisor resulted in huge losses to their accounts.



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