If I Sue My Financial Advisor, What Is the Process for Me to Recover My Investment Losses?
In the event you have realized investment losses due to broker misconduct, chances are that you are required to pursue your claims in arbitration before the Financial Industry Regulatory Authority (FINRA). In a more limited number of circumstances, if no arbitration agreement exists between you and your brokerage firm, you may be able to pursue your claims in court. Below is a step-by-step discussion of what to expect in your case.
Step 1 — Initial Case Evaluation: Every case begins with a free case evaluation. During the evaluation process, your attorney should preliminarily assess the strengths and weaknesses of your case. As part of this process, it is important to gather and provide us with relevant documents and information about your case, and the history of your relationship with the individual or entity in which you are contemplating filing a claim. This is a critical stage of your case as it provides the building blocks for of an effective and persuasive presentation.
Step 2 — Forum for Filing: The next step of the process is determining where your claim must be filed. If you are a customer of a brokerage firm, chances are your claim will have to be filed as an arbitration before the Financial Industry Regulatory Authority (FINRA). FINRA is the primary regulatory forum for resolving securities disputes. It is likely that when you established a relationship with your financial advisor or brokerage firm, you signed an arbitration agreement requiring arbitration before FINRA. FINRA arbitration is generally a better forum for customers like yourself to resolve disputes. It is less expensive than litigating in court and provides a platform for more efficient and timely resolution of claims. The FINRA arbitration process is initiated by filing a Statement of Claim. The Statement of Claim is a written document that sets forth your story and the reasons why you should recover your investment losses. The brokerage firm or financial advisor is then given an opportunity to file a Statement of Answer, which sets forth their response to your claims. Alternatively, if there is no arbitration agreement, you can pursue your claims in court.
Step 3 — Standard Discovery Process: Both parties in an arbitration or court proceeding are required to exchange certain categories of documents and information to fully evaluate the case and prepare for trial. This is known as the discovery process. In arbitration, the discovery process is limited. In court, the discovery process is generally more expansive.
Step 4 — Settlement Negotiations: It is customary that parties to an arbitration or court proceeding engage in settlement negotiations. Sometimes, these negotiations occur early in a case. More often, they occur as the parties near the commencement of a final arbitration hearing or trial. Over the years, mediation has become a common and successful means of resolving investment related disputes. Mediation is a form of alternative dispute resolution in which a neutral mediator assists the parties in reaching an amicable settlement. The mediator will meet privately with both parties and help facilitate a meaningful discussion regarding the settlement of your claims.
Step 5 — Final Arbitration Hearing or Trial: In the event that a satisfactory settlement agreement cannot be reached, your claim will proceed to a final arbitration hearing or trial. During the final arbitration hearing or trial both parties are given the opportunity to make an opening statement, present testimony and documentary evidence, and make a closing argument. At the conclusion of the proceeding, the arbitrators will render an Arbitration Award which sets forth the amount of monetary compensation to which you are entitled. If your matter is filed in court, a judge/jury will similarly determine the outcome of your claim.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.