On behalf of Mihalek Law posted in Securities Law on Friday, March 27, 2015.
When a stockbroker does something illegal with the investments of a client it is possible that they could face legal ramifications. An investor may even be able to recover some of the money lost. Unlike in other types of legal actions where a lawsuit is filed, disputes of this nature are often settled via arbitration. Though arbitration is a term that many have likely heard they may not know what it actually means.
In arbitration, rather than a jury or judge deciding the outcome of the case, either a single arbitrator or a panel of three arbitrators make that determination. In addition to deciding whether investors have been harmed, an arbitrator or the arbitration panel will determine whether the investor will be compensated and if so, how much he or she will receive. It will also determine whether any corrective action will be taken.
In some cases an investor will not even have to be present at a hearing. Instead, an arbitrator will base his or her decision on written descriptions of the situation and related documents. According to the U.S. Securities and Exchange Commission website, to have a simplified arbitration, the claims must be for $50,000 or less.
Investors who believe that they have lost money as a result of illegal behavior on the part of their stockbroker should know that there is a certain window of time during which such a claim can be filed. This is generally within six years of the incident that prompted the action.
There is no question that the process of trying to recoup a lost investment is complicated. Accordingly, it is a good idea to work with a lawyer.