If you have suffered losses from securities fraud, there are several factors that help in determining which legal proceeding will best fit your claim:
• The amount of money you lost
• The amount of money you have to spend on legal proceedings
• If you were the only victim of fraud, or if other investors were also wronged by the same stockbroker or investment firm.
Arbitration is currently the most common option for individual investors proceeding against investment firms. This is used mostly for individual investors who did not lose large sums of money and do not have the funds to take on an extensive suit against the stockbroker. Arbitration often works against the investor. You should talk to an attorney specialising in stockbroker fraud before you choose this option.
Litigation against investment firms usually involves individuals joining together to file a class-action lawsuit. This option pools together resources in order to make a large case against the defendant.
Arbitration: An individual option
Arbitration is an alternative to litigation in which two parties at odds submit their claims to a panel of third-party arbitrators. These arbitrators review claims and execute a binding legal decision. Traditionally, the arbitration panel consists of one professional within the field of securities and two public arbitrators from outside of the securities field. These professionals are often attorneys, accountants or bankers, educators or judges. The U.S. Securities and Exchange Commission has recently established that an investor has the right to request an arbitration panel consisting of all public arbitrators, but this request must be made soon after the arbitration process begins.
Arbitration is meant to be a quicker and cheaper way to settle disputes compared to the traditional legal system. Proceedings are held in a conference room and involve months of preparation. The rules of arbitration are complex and strictly enforced, which often gives the benefit to large investment firms over the investor. Arbitration awards are only subject to court review in a limited number of situations. If you plan on settling a claim against a securities firm in arbitration, you should contact an attorney who specialises in stockbroker fraud as soon as you decide to take action.
Litigation: Power in Numbers
Most litigation that occurs in cases of a stockbroker and other investment fraud transpires in the form of class action lawsuits. Class action suits unite the grievances of multiple investors into a centralised case against an investment firm or stockbroker.
Class action claims are often formed around fraudulent behaviours such as churning, unsuitability, or excessive trading. Any investor involved in a class action suit must have suffered a financial loss during the class period the time period during which the defendant company was reportedly participating in securities fraud.
A federal court determines if the filed grievance meets the requirements for a class action lawsuit. If so, a lead plaintiff is appointed by the court to represent all the members of the suit. Usually, the lead plaintiff has the largest financial interest in the court's decision.
A class action lawsuit is a good option for victims of a stockbroker or other investment fraud. The suit pulls together the resources of many in order to stand up to large investment firms.
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