Why Hire a Lawyer?
Hire a Lawyer at All?
If you suspect that you have suffered losses as a result of the wrongdoing of your broker or brokerage firm, the first question might actually be, “Why Hire a Lawyer?” The answer is perhaps best summarized in the famous phrase, “A man who is his own lawyer has a fool for a client.” The NASD, now FINRA,used to provide some statistics that reflected how poorly “pro se” or self-represented investors fared in securities arbitrations, but alas, they can no longer be found. The latest study of every pro se claimant who filed a securities arbitration in 2006 revealed that the fool recovered money 23.5% of the time. And that statistic doesn’t reveal how much money was recovered – it could have been a pittance compared to the result obtained if a securities lawyer had been hired.
What is Securities/FINRA Arbitration?
The United States Supreme Court ruled in 1987 that any investor opening an account at a broker dealer can be required to sign a document that contains a binding arbitration provision. So as opposed to having the ability to file a case in a court of law, investors have to take their claims through arbitration. Securities arbitrations are now administered through one organization – FINRA and one set of rules applies to those arbitrations.
Arbitration differs the most from a court case in the time involved: the entire arbitration process takes a lot less time than court. Also, the result will be final as the brokerage firms have very limited rights to appeal, whereas court cases can drag on for years. Arbitration is also cheap compared to court since there are no depositions or travel costs except for the arbitration itself. Note: some cases belong in court where, for example, there is no binding arbitration agreement and where the case is a class action.
What is a Securities/FINRA Arbitration Lawyer?
As mentioned above, since all brokerage disputes for over the last 25 years have been required to go to arbitration, lawyers for both the firms and the investors have developed a specialty in this area due to the volume of cases. In the year 2015, for example, 3,489 cases went through the FINRA arbitration process. It’s easy to imagine that after 25 years of specializing in this work, this cadre of lawyers have finely tuned and perfected their expertise. By definition, a securities arbitration attorney is a lawyer for whom the vast majority of their work is in the defense or prosecution of brokerage firm or investment advisor disputes in FINRA arbitrations.
Why Hire an Experienced Securities Arbitration Lawyer as Opposed to an Experienced Trial or Business Lawyer?
I have been known to say on many an occasion that a seasoned trial lawyer is a fish out of water in a securities arbitration. Why is that? Because securities arbitrations are a whole different ball game – with different rules, procedures and protocol. The discovery process is the most unusual for a business trial lawyer. A litigator is used to having depositions and interrogatories and very strict, formal codes for what is and is not discoverable. Though FINRA has a Discovery Guide, it is only a guide and one about which quite a bit of gamesmanship has developed. I wrote an article on the subject back in 1990 entitled, “"Forced Arbitration - Perfect Justice? Discovery in Arbitration," that was published in the Securities Arbitration Commentator. Only a securities lawyer like myself who has been fighting these unique discovery battles for over 20 years can adequately represent investors in securities arbitration so that they can obtain what they need to win their case. I have learned that half the battle is in getting the necessary documents from the brokerage firms. Because arbitration is more lax than court, brokerage firms think they can get away with simply not producing harmful documents.
The Arbitrator Selection Process
Another distinct difference between court and arbitration is the arbitrator selection process. Unlike in court where you have a judge or a judge and a jury, in arbitration, there is an arbitration panel – usually three people who are both the judge and the jury. They go through extensive training to become arbitrators, and the securities lawyer who represent investors must have the skill and know the art in getting the best arbitrators on the panel. As a securities lawyer having represented over 1,000 clients in securities arbitration, I have honed a very good methodology in selection.
Settlement and Mediation
Though all general litigators are familiar with settlement and mediation, again in securities arbitration where the real benefit comes from hiring a securities arbitration attorney is that the players are a fairly limited group of individuals who have gotten to know each other’s style and tactics over the years. This includes both the defense lawyers and the mediators. Having a history and a working rapport with the specific individuals or their firms is quite advantageous. Though a large percentage of my cases settle, I never take a case that I am not willing to try and think I can win. My experience has taught me that unless you pursue a case very aggressively from the get-go, you are never in an optimum position to enter into settlement talks.
Think about it – a brokerage firm might defend hundreds or thousands of securities arbitrations. It has learned all of the tricks and nuances that only experience can provide. An investor, on the other hand, has but one case and no experience.
The First Step You Should Take
If you think you may have a claim against your brokerage firm, I have some advice that has no downside other than your time: Find a securities arbitration lawyer to evaluate your case and not charge you. Most securities lawyers, like myself, will do this for free. I have evaluated many a case where, after a review of documents and conversations with the potential client which activity can sometimes last weeks or months, I advise that no action should be taken. The uncompensated time that I spend is simply the cost of doing business as a securities attorney.
More often, evaluations take significantly less time and you the investor will learn from me, by way of example, whether you have a case that should be pursued, taking into account such factors as the amount of damages that could be recovered, the strength of the liability case, any sympathetic or damaging factors, and the collectability of any award. This is invaluable information that’s free for the taking! And for you, the potential claimant and investor, though you may get an answer you didn’t want to hear – like you should not pursue your case - you do come away with the benefit of going on with your life, knowing that an experienced evaluated your case and declined it.
How are Securities Arbitration Attorneys Paid?
Most securities arbitration lawyers are compensated on a contingency basis – they receive a percentage of your recovery only if you recover. Many times, since the case itself is about the loss of the investors’ money, the investor often doesn’t have the financial means to hire a lawyer on an hourly basis. The benefits of a contingency fee relationship to you the investor are that a) you are not out any lawyers’ fees if you lose and b) your lawyer’s interests are aligned with yours when, for example, evaluating the advisability of a settlement.
But contingency is not the only way to hire a securities arbitration lawyer and the nice thing is that the choice is YOURS, not the lawyers. In fact, the Colorado ethical rules that govern lawyers in the state of Colorado require that the following be provided to clients who agree to a contingency fee:
Type of Attorney Fee Agreements: I have been informed and understand that there are several types of attorney fee arrangements: (1) time based; (2) fixed; or (3) contingent. "Time based" means a fee that is determined by the amount of time involved, such as so much per hour, day, or week. "Fixed" means a fee that is based on an agreed amount regardless of the time or effort involved or the result obtained. "Contingent" means a certain agreed percentage or amount that is payable only upon attaining a recovery percentage or amount that is payable only upon attaining a recovery regardless of the time or effort involved. I understand I have the right to choose the type of attorney fee arrangement.
Realize though that just because you may choose to have an hourly or contingency fee arrangement, that doesn’t mean that the lawyer has to accept it. There have been many a case that I have had where I have advised the client that the case had too many warts for my comfort in taking the case on contingency. In those situations, I will refer the case to another lawyer since who knows, perhaps another lawyer might be willing to take the case on contingency.
And there are still other payment options called “hybrid” agreements. For example, I may allow a client to pay me hourly up through the discovery phase of the case (where we often discover smoking gun documents that dramatically help the case) and then switch to contingency. Or, I might accept a case where I am paid a lower hourly rate and a lower contingency fee. There are many, many options for investors in how they can have their cases handled.
Contact Ms. Stoneman, Stoneman Law (800) 783-0748 Free consultation, Nationwide Representation
DID YOU KNOW AND SECURITIES IN THE NEWS!
Since Arizona borders Colorado and I live in Colorado, I am more familiar with its securities laws and regulations and Arizona arbitrators. Because arbitrators are from the state or region where the investor resides, my familiarity with the arbitrator roster and individual arbitrators in Arizona and surrounding states is a significant benefit. And remember that I do not need to be licensed in the state of Arizona in order to represent Utah investors in securities arbitrations. I don’t even need to affiliate with local counsel. I also have the benefit of the knowledge of my husband Douglas Schulz (www.securitiesexpert.com), who has been hired in over 1,140 securities related matters and testified in over 637 FINRA arbitrations and civil cases regarding investment and brokerage disputes. Because the majority of his expert work is also in Colorado and surrounding states, he too is very familiar with Arizona securities arbitrators and arbitrations.
Arizona is considered an investor friendly state, likely due to the high number of retirees that settle there. Arbitration awards from Arizona are often better than many other areas of the country.
Investors in Arizona are protected by legislative laws and statutes together with industry rules that prohibit brokers from engaging in fraud, unsuitable sales, churning, unauthorized trading, failure to supervise, breach of fiduciary duty, or negligence. Below are useful links and resources covering some of the investor protections available in the State of Arizona:
- Arizona Securities Division (link is http://www.azcc.gov/divisions/securities/) “The Securities Division strives to preserve the integrity of the financial marketplace through investigative actions as well as the registration and oversight of securities, securities dealers and salespersons, and investment advisers and their representatives…”
- Arizona Securities Act (link is http://www.azcc.gov/divisions/securities/statutes_and_rules/) governs the registration, offer or sale of securities within or from Arizona.
- FINRA (link is http://www.finra.org/) is an independent regulatory agency that regulates all broker-dealers in the United States.
- Securities and Exchange Commission (SEC)(link is https://www.sec.gov/) also creates and enforces the securities laws.
Realize though that investors are rarely compensated by state securities regulators as a result of an enforcement action. Compensation from the regulators happens usually when there are numerous victims and the losses are large. The best chance for investors to recover their losses is through initiating a securities arbitration with an experienced securities arbitration attorney, like myself.
Stoneman Law represents investors in all major Arizona cities including Phoenix, Tucson, Mesa, Chandler, Scottsdale, Glendale, Gilbert, Tempe, Peoria, and Surprise. Our consultations are free of charge and the firm is only compensated if you recover.
Where Do FINRA Arbitrations Take Place in Arizona?
All arbitrations for Arizona residents take place in Phoenix.
And remember that arbitrations take place in the state where the investor resides, NOT where the brokerage firm or stockbroker office!!
Arizona Securities News
December 17, 2017. Matt Neubert, director of the Arizona Corporation Commission's Securities Division, offered investors some red flags to beware of when being pitched for an investment idea:
· Making an investment on "inside information," especially if someone says not to share that news with regulators.
· Affinity sales. Don't invest just because you trust someone in your church or club or ethnic group.
· High-pressure sales. Don't invest until you run the opportunity by a trusted financial adviser or lawyer.
· Unrealistically high interest rates of return. When a certificate of deposit generates 1 or 2 percent, be careful when someone is offering interest rates of 12 to 20 percent.
· Lack of documentation. Ask for audited financial statements.
· "Personal guarantees." Stay away from any promising that investors cannot lose money, because often they do.
· Before parting with their money, Neubert said, potential investors should contact the Corporation Commission's Securities Division to determine if the seller is a licensed securities salesperson or licensed investment adviser.
· Investors can call 602-542-0662 to determine a person's educational and disciplinary history with the state Corporation Commission. Additional information can be found at azinvestor.gov.