Bad Investments / Stockbroker Arbitration

How to Spot Investment Scams in 6 Simple Steps

Whether in Arizona state or federal court, or before a panel of arbitrators, the attorneys at Heurlin Sherlock have the knowledge, skill, and experience to represent investors who have been victimized by unlawful and unscrupulous stockbrokers, securities firms, and promoters.

When investors suffer losses due to misleading advice, fraudulent transactions, or violations of securities laws, they have claims against the stockbroker or investment advisor for misconduct. An injured investor may wish to file a lawsuit to recover compensation for the loss, although in many cases he or she will be required to submit the claim to arbitration for resolution. We are one of few Arizona firms with the experience to investigate the complex web of securities regulations, and uncover the legal violations that will enable an injured investor to recover compensation for financial wrongdoing by a stockbroker. Stockbroker misconduct can take many forms, such as:

Unsuitability – broker recommended investments that were inappropriate for the investor’s goals, age, or objectives.

Misrepresentations and omissions – Sellers of securities must provide accurate information about the investments they recommend. Any misrepresentation or omission, whether intentional or negligent, is a potential violation of state and federal securities laws.

Unauthorized trading or failing to follow client instructions – stockbrokers are required to follow clients’ requests, and may be liable for losses if they do not.

Breach of fiduciary duty – when a broker knows that an investor is relying on the broker for advice, a high level of trust exists, creating an obligation for the broker to act in good faith, with the highest degree of loyalty to the investor.

Negligence – stockbrokers and advisors are liable if they fail to use diligence or act imprudently in the handling of an account.

Failure to supervise – brokerage firms have an obligation to supervise the activities of their stockbrokers, review every trade submitted, and investigate suspicious activity.

Churning – illegal, excessive trading occurs when a broker controls the account, trading is excessive in light of investment objectives, and the broker intended to defraud the customer or acted willfully or in reckless disregard of the investor’s best interests.

Arbitration

As a requirement of opening an account with most stockbroker firms, investors must sign an opening account agreement that contains an “arbitration clause.” This requires that any dispute be resolved through arbitration, rather than court litigation. Arbitration against a stockbroker is pursued through the Financial Industry Regulatory Agency (FINRA).

In general, arbitration provides a fair and impartial means of dispute resolution, and is faster and less expensive than court litigation. Judges and juries have no role in arbitration; instead, the case is decided by a panel of three arbitrators selected from a list of qualified individuals. Typically, the arbitration panel comprises an attorney, a person with experience within the securities industry, and a “public arbitrator” who is trained as an arbitrator yet is not an attorney and has no connection to the securities industry.

Arbitration typically occurs within one year of filing a claim. The decision of the arbitrators must be made within 45 days of the hearing, and the broker must pay any award within 30 days. Decisions are final and binding on all parties. There is no appeal.

Bruce R. Heurlin serves as a FINRA arbitrator, often as the Chairperson of the arbitration panel. Mr. Heurlin has also represented victims of bad investments, as well as stockbrokers and major stockbroker firms. Heurlin Sherlock = Hardworking Smart. For assistance with your securities litigation or arbitration matter, contact the lawyers at Heurlin Sherlock today.