Are you the victim of stockbroker fraud and/or negligence? If so, you may have the right to bring a legal case against them.  But, you have to proceed in the right way to obtain the best outcome.

In order to ensure that you have all you need to maximize your case, it’s very important to preserve and gather your evidence as well as to know how to properly file your claim. How should you go about doing this?

Well, here are some valuable tips for bringing a claim against your stockbroker to set yourself up for the best possible outcome. 

Tips for Suing Your Broker

Did you know that in 2020 the Financial Industry Regulatory Authority (FINRA) received 5,472 complaints by customers against their brokers or investment firms? Compare this to the mere 2,954 that FINRA received in 2019 and you can see that stockbroker fraud and misconduct is on the rise. Surprisingly, oftentimes investors don’t even notice the stockbroker’s fraud or negligence until much later. And, they don’t know that they can investigate their broker using FINRA brokercheck to see if there have been any investor complaints in the past. Sometimes, had this been done at the time the investor opened their accounts,  they would have chosen to invest with someone else.

If you’re the victim of stockbroker fraud or negligence, the first thing you should do is to consult an experienced investor fraud lawyer.  This is because there are various time limitations that could prevent you from successfully bringing your case. Sometimes waiting too long to sue can cause you to lose your rights.

To protect your rights and set yourself up for the best outcome, you should understand the process. Below are some tips to help you prepare to file a claim against your stockbroker:

  1. Research your Broker

First, if you haven’t done so already, you should look up the complaint information about your broker and brokerage firm. The Financial Industry Regulatory Authority, also known as FINRA, maintains a database that includes other claims filed against your broker and firm. Using the brokercheck tool, you can see all other claims which have been made against your stockbroker.

This is very helpful information and can be included as part of your evidence in your case—particularly if many complaints have been made. This can also give you an idea of how strong your claim for improper supervision against the brokerage firm might be.

If your broker or brokerage firm that they work for is a FINRA member, they will appear on the broker check. This means that you can bring your claim in arbitration using the FINRA dispute resolution process.

  1. Check Your Brokerage Account Forms 

Check your account opening documents for any arbitration clause. This provision will determine where you have to file your case. Most brokerage account documents contain an arbitration clause requiring that all disputes be arbitrated before FINRA. FINRA Arbitration is an alternative to litigation or mediation. It is a process that is relatively simple and lasts about 12-14 months from start to finish.  FINRA’s decisions are called an “award,”  and are generally final and binding on all the parties. 

Arbitration is a confidential process, and for the most part, the documents submitted in the arbitration are not publicly-available, unlike in court proceedings. However, the arbitration awards are posted by FINRA on its awards database.

There are no depositions in FINRA arbitration,  and the parties’ discovery is limited to an exchange of documents or evidence. For this reason, it is important to gather all of your evidence right away.

  1. Gather Your Case Evidence

No matter what your claims against your stockbroker are, your documentary evidence can make or break your case. In order for a law firm to fully evaluate your case, you should first gather as many of the documents as you can. Common documents include your monthly brokerage statements, emails, letters, screenshots, new account forms, and any information provided by your stockbroker about the account or investments.

What is contained in this evidence will determine your legal claims in your case. So, gathering this ahead of time will greatly assist your securities lawyer.

  1. What is My Claim?

Typical claims brought in FINRA arbitrations are as follows:

  • Unsuitable recommendations
  • Churning 
  • Unauthorized trading
  • Over-concentration in one security, type of security or geographic region
  • Annuity “twisting” 
  • Broker negligence
  • Broker fraud or misrepresentation
  • Failure to supervise the broker or account
  • Unsuitable trading strategies- such as margin or options
  • Breach of fiduciary duty
  • Breach of contract
  • Breach of state or federal securities laws
  • Elder Fraud

There are other types of securities claims, but these are the most common. The investor has the burden of proving their claims. That’s why gathering the relevant documents is so important.

  1. Consult an Experienced Investor Fraud Attorney

Just like you would not go to an orthopedic surgeon for cataract eye surgery, you should seek a specialist if you have a securities fraud or broker negligence claim. An experienced securities fraud lawyer will have experience in stockbroker cases and FINRA arbitration cases. Some firms, like ours,  offer free case evaluations. This is a great way to have an expert review your case.

This is a great way to find out if you have a real case, as well as to evaluate your options for your investment fraud or negligence claim.

How Do I Recover Money for Securities Fraud?

If you want to recover money for the conduct listed in the complaint, you will have to 

file a FINRA arbitration claim for damages.

Act as soon as possible to retain an experienced FINRA arbitration attorney. If you or a loved one have suffered investment losses as a result of any type of investment fraud or broker negligence, contact the offices of Investment Fraud lawyer Melanie Cherdack for a free consultation. Because she has been in the trenches as a former Wall Street attorney, Melanie Cherdack and her team of experienced attorneys have seen just about every type of investment fraud or investment scam. While almost every investment carries a degree of uncertainty and risk, you may have been unnecessarily exposed to such risk. Former Wall Street securities attorney Melanie S. Cherdack and her team of lawyers represent individual and institutional investors who are unwitting victims of investment fraud and broker negligence. She heads up a group of attorneys who represent investors across the United States. Contact us by filling out our online contact form, or calling 844-635-1609 or 305-349-2336.