What are investors’ typical claims against stock brokers?

• Churning (excessive trading of an account)
• Failure to execute and order or follow instructions
• Excessive use of margin
• Misrepresentation and omissions
• Unauthorized trading
• Unsuitability of recommendations of investments
• Breach of fiduciary duty
• Negligence

See Securities Arbitration for additional information.

How do I know if I have a claim against my stock broker?

Losses in your account(s) does not necessarily mean the broker did something wrong. Review the list of common types of complaints to help you determine if your broker has done something that warrants a claim against him/her. Regardless, a free evaluation of your account and concerns merits you contacting us.

What is Binding Arbitration?

The vast majority of customer complaints against securities brokers are resolved through a dispute resolution process called "binding arbitration", because essentially all customer account agreements prepared by securities brokerage firms specifically state that this form of dispute resolution is to be the exclusive way in which customer complaints will be resolved. In binding arbitration, unlike traditional litigation, the customer's claims are heard and decided by a panel of "arbitrators" under the auspices of an organization which administers arbitration proceedings, such as the Financial Industry Regulatory Authority or the New York Stock Exchange. Depending on the size of your claim, the arbitration panel consists of one arbitrator who is an "industry insider" and two arbitrators who are designated as "public arbitrators" (at least one of whom is usually an attorney). There is no jury, there is relatively little "pretrial" procedure, the legal rules of evidence and procedure do not apply, the arbitrators are not bound by any body of legal precedent and, with rare exception, the decision of the arbitrators is final and not subject to a meaningful appeal. For these reasons, knowledge and experience with these specialized circumstances is critical to the success of the claim. Ordinarily the customer and the brokerage firm share equally in the expenses of the arbitration, including the arbitrators' fees.

Who will serve as the arbitrators?

In most cases, the arbitration panel is made up of three individuals. One is generally an “industry insider” who has a professional background within the securities business. The other two are called “Public arbitrators.” And, although they generally have an understanding of the securities business “public arbitrators”, they have not worked in the securities business before. At least one of the public arbitrators is a lawyer. Of the three members of the panel, a chairman is selected. More often than not, the chairman is an attorney. A principle duty of the chair is to make legal determinations throughout the proceeding.

Where will the arbitration take place?

At MHLRT, we generally file an arbitration claim with the Financial Industry Regulatory Authority (formerly known as the National Association of Security Dealers). FINRA has broken the country into a number of regions. Within each region there are certain cities where the actual arbitration will take place. It is usually in a large city within each state. Pursuant to FINRA’s Code of Arbitration Procedure the location of the arbitration is determined by the residence of the customer when the dispute arose.

If you decide not to represent me, does that mean I have no claim?

Absolutely not. There are many reasons why we may or may not agree to represent you. The merits of your potential case is only one reason. In all matters, we recommend you seek an second opinion. We can recommend other attorneys who specialize in securities litigation to you.

My stock broker left the brokerage firm where my account is. Does this mean I can no longer sue that brokerage firm?

No. The broker was acting as an agent of the brokerage firm he was working for at the time the troubles started. Even if the broker has since moved, the brokerage firm is still responsible for his actions while an employee at the time of controversy.

What are the odds of me winning?

At MHLRT, we are unable to predict the outcome of a case. However, we do not intend to represent a client who has, in our opinion, a losing case. We see the representation of a client as a team effort. The client’s success is the firm’s success as well. Although not every case we take is a “winner”, we pride ourselves on our track record . For a detailed tally of national case statistics, please visit the FINRA website.

What will bringing a claim against my stock broker cost me?

MHLRT generally represents its securities clients on a contingent fee basis. Following the outcome of the case, MHLRT receives 33 1/3 % of the recovered monies. Beyond the contingent fee, the client is responsible for all expenses in the case. Expenses in a standard case include: filing fees, copying charges, long distance telephone charges, mailing and delivery, expert reports and testimony, travel, and lodging.

Is there a chance that my case may settle?

Yes. According the statistics of all cases filed with the FINRA, approximately 50%-60% of cases filed settle prior to the final arbitration hearing. There are, however, many factors that go into the potential of settlement which makes predicting whether a case will settle or not impossible.

How long will the process take?

FINRA states the arbitration process takes, on average, 12 months. Our experience has proven that the process, from start to finish, ranges from 12 to 18 months. We do what we can to keep this time to a minimum, but a multiple of factors can affect the total time it takes to resolve a case.

I don’t live in Virginia, can MHLRT still represent me?

Yes. In fact, many of our clients don’t live in the state of Virginia. We have successfully represented clients who live across the country. A great deal of the work can be done over the phone, electronically, and through the mail system.

Will my stock broker be fired because I file a claim?

It is impossible for us to know. However, we do know that a complaint filed against a stock broker is reported on his/her permanent and public employment record.

What kind of damages are typically included in an award?

As part of the complaint, we generally include the out-of-pocket losses associated with the wrongdoing, attorneys fees, expenses, lost interest, and punitive damages. Our experience shows, that although we fight for damages beyond just the out-of-pocket losses, arbitration panels do not often award damages beyond these losses.

It has taken me several months to work up the nerve to do anything about this situation. What are the time limitations to file for arbitration?

All claims may be forever barred if not brought within a certain time limit. The time limit, also known as the statute of limitations, varies for different types of claims. Therefore, you may still have time. The attorneys at MHLRT will be able to determine if the statute of limitations has run out on your claim.

Does MHLRT handle any other types of cases in addition to Securities Litigation?

Yes. MHLRT is a full service law firm. Our firm handles a variety of legal matters, including commercial litigation, family law, trust and estate matters, and complex litigation, as well as cases involving personal injury, defective products that injure or kill, medical malpractice, tractor trailer accidents, auto accidents, explosions and fires, industrial accidents, occupational diseases, pharmaceutical cases, and many others.