Introduction

Fraud in connection with the sale of securities is prohibited by federal and state laws. Private causes of action for fraud and violation of the federal securities laws, are recognized under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

When investors open an individual account at any of the major brokerage firms they usually sign a form which requires that all customer complaints and grievances, including investment fraud claims, be submitted to special arbitration forums established by the National Association of Securities Dealers (NASD) or the New York Stock Exchange (NYSE). This kind of arbitration agreement means that any new customer complaint cannot be filed in court as a lawsuit; it must instead be submitted to the NASD or NYSE arbitration programs. Generally, these types of investor claims are referred to as securities arbitration claims.

Not every investment loss results from broker misconduct. However, when an investor's losses result from unsuitable recommendations, fraud, misrepresentations, excessive trading, unauthorized trades, failure to follow instructions, or other misbehavior by a stockbroker, rather than simply the luck of the market, it is often worth pursuing a claim against the broker or other financial advisor.

The best way to determine whether you may have a claim is to talk to a lawyer who is experienced in representing investors. Many people with good claims fail to recover their money simply because they incorrectly decide, without qualified advice, that their losses are their own fault or that their claims will fail for one reason or another.

These investors may think, for example, that it is too late to bring their claims or that a document that they signed may bar their recovery. They may blame themselves for not being more careful. They may think that, before they talk to a lawyer, they should organize their own paperwork. They procrastinate and agonize over their losses, but never recover them, because they neither pursue their own claims, nor seek appropriate help.

Sometimes such people do not know how to find a lawyer who is experienced in representing investors. Sometimes they worry that they will appear foolish. Sometimes they worry about whether it will cost them money to consult a lawyer. All of these fears are groundless. There are many qualified investment lawyers who will give you a free consultation with no obligation to help you determine whether you may have a claim worth pursuing. After you talk to them, you can decide whether to take your losses, to bring your own claim without help, or to engage a lawyer to represent you.

If you do talk to a lawyer, he or she will be looking at the following important issues:
Was there some recognized kind of misconduct?

Did that misconduct cause an economic loss?

How much money can you hope to recover?

How good is your proof of both the misconduct and the loss?

Do you have a choice between court and arbitration?

How much will it cost to pursue your claim?

How likely is it that your claims are barred by time limits?

Will you be able to collect any award or judgment that you may get?

Generally, if your loss resulted from lying, cheating, stealing, unsuitable recommendations, unsuitable transactions, unauthorized trades, excessive trading, or failure to follow instructions, you have a claim that may be worth pursuing.