Everyone is reprinting a new story from Reuters about a Stanford Law School/Cornerstone Research study which reports that in 2011, securities fraud settlements in federal courts plummeted to their lowest level in a decade. Various experts are offering their two cents as to why that might be the case.
But for individuals whose losses were caused by misconduct of a brokerage firm, the question is pretty much irrelevant. Investor cases against brokers and broker-dealers aren’t generally brought in court. Almost all such cases are subject to mandatory FINRA arbitration. And at FINRA, most cases still settle.
In 2011, 60% of FINRA proceedings were resolved through direct settlement or mediation. That’s nearly the same percentage as in 2010 and it’s an increase of around 5% from 2008 and 2009. Settlements through January of this year were keeping pace. In fact, the percentage of arbitration matters settling is likely higher than 60% because these figures don’t include “stipulated awards” — awards privately agreed to by the parties and presented to the arbitrators for formal approval. Stipulated awards are settlements, but aren’t counted as such in FINRA’s settlement stats because the underlying terms of the settlement aren’t disclosed in the award.
The bottom line is that the Reuters story has nothing to do with the likelihood that an individual investor’s claim might be settled. Most FINRA cases settle. In fact, if you add to the settlement figures the additional cases that go to hearing and result in some kind of award for the investor, the great majority of FINRA cases result in the investor being better off than if he or she had done nothing at all.
That’s why we can’t emphasize enough how important it is for victims to fight back when they believe their broker may have acted improperly. If you’re not sure about your own broker’s conduct, call us at 866-932-1295. We’ll tell you whether you have a valid claim and, if so, we’ll help you to pursue it.
Hugh Berkson is a Securities Attorney with McCarthy, Lebit, Crystal & Liffman, Co. LPA. Hugh is rated AV® Preeminent™ by Martindale-Hubbell®.
He obtained a business degree in Finance from the University of Texas at Austin in 1989, and is a 1994 graduate of Case Western Reserve University School of Law, where he was a member of the Order of the Barristers and received both the American Jurisprudence Award, (National Mock Trial) in 1993 and the Jonathan M. Ault Mock Trial Prize for 1993-1994.
