Frequently Asked Questions
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
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 MichieHamlett, 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 MichieHamlett, 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,
visit the FINRA website.
What will bringing a claim against my stock broker cost me?
MichieHamlett, generally represents its securities clients on a contingent
fee basis. Following the outcome of the case, MichieHamlett 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 MichieHamlett 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
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 MichieHamlett will be able
to determine if the statute of limitations has run out on
Does MichieHamlett handle any other types of cases in addition to Securities Litigation?
Yes. MichieHamlett is a multi-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.