FAQs
About Securities Fraud
Q: What is arbitration?
A: Arbitration is a form of alternate dispute resolution (ADR). In arbitration, a panel of arbitrators listens to the evidence presented by each side and then decides the case in much the same way as a judge or jury would decide the case in a lawsuit.
Q: If I don't want to go to arbitration, can I go to court instead?
A: Probably not. When an investor opens a brokerage account, the paperwork the customer signs usually includes a clause requiring the customer to take any disputes with the broker or the firm to arbitration instead of court. The United States Supreme Court has held that such pre-dispute arbitration clauses are valid and enforceable. There are exceptions, however. A knowledgeable securities lawyer will be able to determine whether you have a right to go to court instead of arbitration.
Q: I've heard that arbitration is less expensive than going to court. Is that true?
A: No. Although the securities industry would have you believe that arbitration is less expensive, it is not. In Georgia, it costs less than $100 to file a lawsuit. Filing fees for securities arbitration cases typically run more than $1,000. In a civil lawsuit, the parties do not have to pay the judge beyond what they contribute through their tax dollars. In arbitration, the parties have to pay the arbitrators to hear and decide the case. The longer the case takes, the more the parties have to pay.
Q: What are the advantages to arbitration, then?
A: Any advantages go to the brokerage firms. The securities industry created mandatory arbitration to avoid the kind of accountability that they would face from judges and juries in civil lawsuits. There is no advantage to investors.
Q: Do I have any shot at justice in arbitration?
A: Yes. With a lawyer knowledgeable about the securities industry and arbitration procedure you still can receive some measure of justice from an arbitration panel. The securities industry is highly regulated. The firms are required to keep many documents that can help prove your case to the arbitration panel. Having knowledgeable counsel is essential to success because brokerage firms will often deny that they have these documents when dealing with customers proceeding without counsel or when dealing with counsel unfamiliar with the industry record-keeping requirements.
Q: If I decide to proceed with arbitration, how long will it be before my case is heard?
A: The latest statistics from the National Association of Securities Dealers (NASD) Dispute Resolution division indicate that cases take an average of 17.4 months, from filing to decision by the panel.
Q: Do arbitration cases ever settle before the hearing?
A: According to the NASD, of the 5,531 arbitration actions concluded in 2001, 3,078 (55%) settled.
Q: How many of the cases that are tried result in a decision for the investor?
A: According to NASD statistics for 2001, arbitration panels decided in favor of customers in 53% of the cases decided.
Q: If I hire a lawyer to pursue an arbitration case for me, how much will the lawyer charge me?
A: While every law firm is different, at Huddleston Law Firm we offer clients a variety of fee options. Depending on the case, the client may chose to pay an hourly fee, a contingent fee (in which the attorneys fee is calculated as a percentage of the amount recovered for the client), or a hybrid fee consisting of an hourly fee and a reduced contingent fee.
Q: Where can I learn more about the kind of broker misconduct that would give me a right to recover?
A: Contact us