Investors Use Stockbroker Arbitration to Regain Lost Money

Miami, FLFinancial turmoil is in the news again, with many investors turning to stockbroker arbitration to try to get back some of the money they have lost due to unethical financial advisors and unscrupulous companies. Recently, Citigroup has been under attack for its MAT Five Fund and other funds that suffered massive losses.

Investors allege that Citigroup marketed its funds as higher-yielding than municipal bonds but with very little risk. Unfortunately, the funds were tied to hedge funds that recently collapsed, leaving investors out of pocket for hundreds of thousands of dollars.

Meanwhile, a recent federal appellate court decision has added extra protection for investors. The US Court of Appeals for the District of Columbia reversed a lower court ruling when it found that a stockbroker cannot have a customer's complaint taken off his record. The move came after a case in which a mutual fund broker allegedly put an investor's money in unsuitable investments, costing the investor over $100,000. The case went to arbitration and, in exchange for a settlement the investor was asked to agree that the dispute be wiped off the broker's Central Registration Depository record. However, Maryland's securities commissioner stepped in, arguing that financial advisors should not be able to buy a clean record.

Currently, disputes can only be wiped from a record if the complaint is false or erroneous, or if the person named in the complaint was the wrong person. The reason for having a Central Registration Depository, and for keeping track of financial advisors' records, is so that investors and regulators have full knowledge of the brokers investing their money.

Unfortunately, there is no shortage of unscrupulous advisors willing to take advantage of inexperienced investors. There is also no shortage of ways for that unethical advisor to scam money out of his clients. It can be as simple as putting an investors funds in inappropriate investments, such as high risk investments for a client who cannot tolerate loss or long term investments for a client who is only looking to invest for the short term.

Stockbrokers might also make excessive transactions on an account (known as churning an account). This creates money for the broker in the form of commissions. They may also misappropriate an investor's funds or make unauthorized trades on the client's behalf. All of these are forms of stockbroker misconduct. Investors who have been victim to stockbroker misconduct can file stockbroker arbitration claims to regain lost money.

Investors can also recover money from investment firms, if they can show that the firm was negligent in its supervision of its brokers or if it encouraged them in any way to misrepresent the stability of an investment.

However, the arbitration process can be complicated, with various deadlines and filings required. If you have been the victim of stockbroker misconduct, your best bet is to contact an experienced lawyer, who can help you navigate the stockbroker arbitration process.