Frequently Asked Questions
What is the purpose of Securities Arbitration?
Q. What is the purpose of Securities Arbitration?
A. To provide the public with a relatively quick, fair and inexpensive resolution of their brokerage related dispute.
Q. Do I have to go to Arbitration, can I go to court instead?
A. You must go to arbitration if you signed a customer agreement that contained a pre-dispute arbitration clause. We know of no major firm that does not insert an arbitration clause in their customer agreements. It has been upheld by the U.S. Supreme Court as enforceable. In most instances it is a complete waste of your time and money to attempt to circumvent arbitration.
Q. Why should I use Investors Recovery Service?
A. The breath and depth of our experience, and success in securities arbitration is extraordinary. The number of law firms that specialize in securities arbitration is less than 300 nationwide. There are only a handful of law firms that possess similar experience but very few, to the best of our knowledge, are as accommodating in providing competitive and affordable representation, and few will take as many challenging cases as we have.
Q. Donít you have to be a lawyer to represent someone in arbitration?
A. No. We have represented about 1000 clients since 1991 in arbitration, and have tried roughly 250 cases to a decision. Many of our clients were referred to us by attorneys, because they highly regarded the specialized knowledge and experience of the Securities Industry that we possess. Many of our clients are attorneys, thus rendering the notion that one need not be foolish or unsophisticated to be defrauded by deceitful stock brokers. Courts have confirmed that we are permitted by law to represent parties in securities industry arbitration forums. However, beginning January 1998, we began to provide an experienced securities attorney for each of our clients. Therefore, a client of Investors Recovery Service not only has an experienced securities industry professional to represent them, but also an experienced securities attorney.
Q. How long does an arbitration typically take to complete?
A. Approximately 1 to 1 1/2 years from start to finish.
Q. Is arbitration similar to going to court?
A. No. Arbitration is more informal, discovery is more limited, and most importantly, unlike going to court, arbitration awards are binding, and extremely difficult to overturn. The arbitrators are often not attorneys, and there is no judge involved.
Q. What if the broker doesnít pay the award?
A. If payment is not received within thirty days the firm and the broker are suspended. Also, an arbitration award remains on the brokerís record forever.
Q. What is the downside to arbitration?
A. Most hearings are administered fairly, but some arbitration panels are, to put it mildly, fairer than others. Hopefully, with our experience we can help select an arbitration panel that will provide the fair hearing that the public have been promised by the Securities Industry.
Q. Can I be awarded punitive damages?
A. Arbitrators are permitted to make punitive awards, but they are usually only awarded in claims where the conduct at issue is highly egregious and represents a continuing danger to the public.
Q. Can I get my costs back, including representation fees?
A. Sometimes, but unless the pre-dispute clause in your customer agreement specifically call for the reimbursement of attorneys fees to the prevailing party, that is very unlikely. Similarly, you do not have to realistically worry about paying the other sides legal fees should you lose.
Q. What will it cost to have your firm represent me?
A. We have several payment options available, but most of our clients prefer some form of contingency fee. We presently believe that we offer very highly competitive and affordable representation. Typically, we charge 29% if the case settles prior to hearing, and 34% if the matter goes to arbitration.
Q. What are my chances of winning in arbitration?
A. Several years ago the Securities and Exchange Commission concluded that the arbitration process was fair, and resulted in the following percentage awards.
Our track record is that close to 80% of our claims settle and the remainder that go to hearing are won about 60% of the time.
Q. Is there a time limitation on filing my claim?
A. Yes, but it can vary from state to state. Typically though, your claim has more value the sooner it is filed.
Q. Are the rules governing the securities industry different for online brokers?
A. No. They are identical for all brokerages whether or not they are full service, discount or online.
Q. Is there a limit on the size of claim you will handle?
A. No. We currently are involved with individual customer claims that range from as little as $15,000 to as high as $10,000,000. What is important is that the claim is meritorious, that the brokerage firm acted out of conformity with customary industry rules and practices.
Q. Is there any consultation fee?
A. No. There is no fee to review a potential claim. We will spend whatever time is necessary, at our expense, to insure that we have carefully evaluated the reasons behind your losses, and every realistic avenue of recovery.