If you have suffered securities fraud losses, there are several factors that help determine which legal procedure will best suit 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 harmed by the same broker or investment firm.
Arbitration is currently the most common option for individual investors acting against investment firms. This is primarily used for individual investors who did not lose large sums of money and do not have the funds to pursue an extensive lawsuit against the broker. Arbitrage often works against the investor. You should speak with a brokerage fraud attorney before choosing this option.
Litigation against investment firms typically involves people coming together to file a class action lawsuit. This option pools resources to make a great case against the defender.
Arbitration: an individual option
Arbitration is an alternative to litigation in which two disagreeing parties present their claims to a panel of outside arbitrators. These arbitrators review the claims and execute a binding legal decision. Traditionally, the arbitration panel consists of one professional from within the securities field and two public arbitrators from outside the securities field. These professionals are usually lawyers, accountants or bankers, educators or judges. The US Securities and Exchange Commission has recently established that an investor has the right to request an arbitration panel comprised of all public arbitrators, but this request must be made shortly after the arbitration process begins.
Arbitration is meant to be a faster and cheaper way to resolve disputes compared to the traditional legal system. The proceedings take place in a conference room and involve months of preparation. The arbitration rules are complex and strictly enforced, often giving large investment firms a benefit over the investor. Arbitration awards are only subject to brief review in a limited number of situations. If you plan to settle a claim against a securities company in arbitration, you should contact an attorney who specializes in broker-dealer fraud as soon as you decide to take action.
Litigation: Power in Numbers
Most of the litigation that occurs in stockbroker and other investment fraud cases takes the form of class action lawsuits. Class action lawsuits join the complaints of multiple investors into a centralized case against an investment firm or broker-dealer.
Class action lawsuits are often formed around fraudulent behavior such as churn, inappropriateness, or over-trading. Any investor involved in a class action lawsuit must have suffered financial losses during the class period–the period of time during which the defendant company allegedly participated in the securities fraud.
A federal court determines whether the filed complaint meets the requirements for a class action lawsuit. If so, the court appoints a lead plaintiff to represent all members of the lawsuit. Usually, the lead plaintiff has the greatest financial interest in the court’s decision.
A class action lawsuit is a good option for victims of stockbroker or other investment fraud. The suit brings together the resources of many to deal with large investment firms.
If you believe you are a victim of financial fraud and wish to proceed with arbitration or litigation, you should contact a securities trial attorney to determine your legal options.