Investment Fraud Lawyer Blog

In response to growing public and political pressure, in a news release dated July 24, 2008, the Financial Industry Regulatory Authority (“FINRA”) announced that it has launched a “pilot program” that scraps the “industry” arbitrator. For “eligible” claims filed on or after October 6, 2008, claimants who elect to participate in the pilot program may choose an arbitration panel composed of three “public” arbitrators instead of two “public” and one “industry” arbitrator (the typical panel composition in a case filed by a customer). Generally speaking, a public arbitrator is one deemed not to be affiliated with the securities industry by FINRA rules governing securities arbitrations. An “industry” arbitrator is affiliated with the securities industry.

Six firms – Merrill Lynch, Citigroup Global Markets, UBS, Wachovia Securities, Morgan Stanley and Charles Schwab – have agreed to participate in the two-year pilot program. Schwab has agreed to “contribute” only 10 cases per year for participation in the program, and the other firms have agreed to contribute 40 cases per year. The firms cannot decide which cases will participate in the program. As noted, the pilot program only applies to “eligible” claims filed on or after October 6, 2008. FINRA’s announcement did not clearly define what is meant by “eligible.”

Continue reading "FINRA Announces Pilot Program To Evaluate All-Public Arbitration Panels" »

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Posted In: Common Securities Broker Abuses , Securities Arbitration

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A recent study of securities arbitration raises some disturbing questions about industry-sponsored arbitration panels. A review of 14,000 NASD and NYSE securities arbitration awards for the period from 1995 through 2004 shows that individual investors are faring worse in cases decided by arbitration panels than they once did. This is particularly true when investors brought their claims against one of the larger brokerage firms. This study, among other complaints, has resulted in challenges to the fairness of securities arbitration, challenges to the inclusion of securities industry arbitrators on panels, and an array of similar issues.

Fortunately for investors, the study does reflect the overall success realized by investors who file securities arbitration claims. As is the case in court proceedings, many arbitration cases (including many of the strongest arbitration cases) are settled by the parties or in mediation. None of these cases or their results are considered in the study. The bottom line is that investors bringing arbitration claims, as a whole, recovered money many more times than the study would suggest.

Continue reading "Securities Arbitration Study Is Disappointing But Does Not Tell The Whole Story About Investor Recoveries" »

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Posted In: Securities Arbitration , Smart Investing Tools

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Thomas P. Fitzgerald, the former Chief Operating Officer of H&R Block Financial Advisors, Inc. of Detroit, Michigan, has been awarded $3.9 million in damages based upon the denial of promised employment compensation by a 3-member panel of arbitrators appointed by the Financial Industry Regulatory Authority (FINRA). Fitzgerald claimed the company refused to pay certain compensation and severance benefits it owed him by contract because he refused to sign a two-year non-compete agreement. The contract was presented to Mr. Fitzgerald as a retention package designed to entice him to remain with the company, then known as OLDE Discount Brokerage, Inc., when it was acquired by H&R Block. Several years later, when H&R Block Financial Advisors attempted to get Mr. Fitzgerald to sign a non-compete agreement, he refused, but continued to work for the company for an additional two-and-a-half years under the existing contract before his employment ended. The company then refused to pay his contractual benefits because he would not sign the proposed noncompete agreement.

The arbitration was held in Southfield, Michigan in November 2007. Page Perry partners J. Boyd Page, J. Steven Parker and James A. Nofi represented Mr. Fitzgerald.

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Posted In: Employment Issues , Securities Arbitration

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On January 30, 2008, the North American Securities Administrators Association Inc. (NASAA) released a list of 11 "pro-investor legislative priorities" that it plans to support this year.

Investment News journalist Bruce Kelly reported that “state securities regulators are worried that the recent emphasis on making U.S. capital markets more competitive could lead to the pre-emption of their power by federal regulators.” Thus, NASAA’s first priority is to “support a strong and effective regulatory structure for capital markets."

NASAA's second priority is to "restore fairness and balance in the securities arbitration system."

Continue reading "NASAA's 2008 Legislative Agenda" »

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Posted In: Common Securities Broker Abuses , Elder Abuses , Regulatory Developments , Securities Arbitration

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According to a study conducted for the Securities Industry Conference on Arbitration (SICA), most securities customers involved in arbitration do not believe that the process is fair to all parties and reported dissatisfaction with the outcome of their disputes.

Compiled by Cornell University’s Survey Research Institute, An Empirical Study: Perception of Fairness of Securities Arbitration summarized the responses of 3,000 participants on both sides of arbitration cases. Although most participants believed the arbitration panel appeared competent, only 40% believed the arbitration panel was open-minded. Participants were split on whether the process is economical. Most desired an explanation of the awards.

Continue reading "Securities Arbitration Participants Say Process Is Unfair" »

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Posted In: Common Securities Broker Abuses , Securities Arbitration

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Gregory A. Fisher, a former Senior Managing Director at Bear Stearns office in Atlanta, Georgia, has been awarded $1.625 million in damages based on a breach by Bear Stearns of its severance agreement with Fisher. A three-member panel of arbitrators appointed by the Financial industry Regulatory Authority (FINRA) issued the award.

Fisher claimed that Bear Stearns forced him out in March 2005 because it was no longer interested in servicing his clients, which included financial institutions in the Caribbean and Latin America. As part of the severance agreement it negotiated with Fisher, Bear Stearns agreed not to solicit certain of fisher’s clients. Upon Fisher's departure, however, Bear Stearns immediately reassigned some of Fisher’s largest accounts and began soliciting their business.

Continue reading "FINRA Arbitration Panel Awards Broker $1.6 Million For Breach Of Severance Agreement" »

Posted by Page Perry, LLC | Permalink | Email This Post

Posted In: Bear Stearns , Employment Issues , Securities Arbitration

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