by Brian Mahany
Each year thousands of people file claims against stockbrokers and their employers. Unauthorized trades, unsuitable investments, “churning” and poor investment advice are common claims. Virtually all of these claims are heard by a panel of arbitrators from the Financial Industry Regulatory Authority. Traditionally, that panel contains a mix of both public and industry members. That is about to change.
Virtually every contract between a broker and a client contains a provision requiring disputes be resolved by arbitration. Arbitration is generally quicker and less costly than litigation but many victims of bad brokerage practices questioned why there was an industry member on the panel hearing their case. After all, a courtroom jury would consist of all outsiders.
The Securities and Exchange Commission (“SEC”) agreed with consumers. Customers whose complaints require a 3 person panel can now choose between a majority public panel (2 of the 3 panelists selected from the public) or an entirely public panel.
There may not be much practical difference, although it’s too early to tell. The industry panelists can sometimes be tougher on one of their own who goes bad. Perception is key, however, and investors who lose money can at least know their case is being heard by 3 disinterested, neutral parties with no ties to the securities industry.
If you have lost money because of the negligence or misconduct of a stockbroker, give us a call. Obviously, no one can predict the market and many investments will lose money through no fault of the broker. Misconduct, however, does happen and there are remedies available.
For more information, contact Brian Mahany at (414) 704-6731 (direct dial) for a no obligation, no nonsense call. We have years of securities arbitration and securities law experience – let us help you determine whether or not you have a case.