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Stock Broker Fraud

Stock Broker Fraud

The decline of the securities markets during the years 2000 through 2003 brought with it an increase in regulatory inquiries, enforcement actions and customer arbitrations. Of particular concern to some, is the increase in customer arbitrations, with arbitration filings at the National Association of Securities Dealers (NASD) approached 9,000 claims in 2003, a historic figure.

In analyzing their losses during those years, many customers, or rather the attorneys who represented them, decided that a fraud claim could be filed against the stock broker who handled the account. However, while the customer claims went up during this time period, the percentage of time that the customer won money, went down.

In 1999 customers won 61% of the time in NASD arbitrations. In 2003, they only won 54% of the time, and have been winning 53-54% of the time since 1999.

While the influx of non-attorneys representing customers in stock broker fraud cases, as well as inexperienced attorneys suddenly representing customers in such claims may have an impact on the lower success rate, part of the problem is also the failure to properly analyze a claim, and a willingness for investors, and their representatives, to label too many stock market losses as instances of stock broker fraud.

A careful analysis of the factual matters underlying a claim, by an experiences securities arbitration attorney is a key to avoiding this problem, and in helping to insure that time and money is not spent pursuing a claim that lacks merit, or in refusing to settle a claim that has marginal merit.

For investors, a little self-education may be helpful. There are any number of articles and publications written regarding claim analysis, and customer arbitrations, including Typical Customer Claims in Arbitration and How To Sue Your Stockbroker Without A Lawyer.

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