Take Steps Toward a Smooth Arbitration

Physician's Money Digest, August15 2003, Volume 10, Issue 15

Burned by a sour stock marketand financial industryfraud, many physician-investorsare seeking satisfaction—inthe form of legal action against anunethical broker. If you're consideringthe rather daunting arbitrationprocess, Weiss Ratings recommendsthe following steps:

1. Decide whether legal counselis necessary. Use the followingguidelines as a general rule of thumbin making your decision:

•If losses are under $10,000, thearbitration procedure is simplified.Therefore, it is neither necessary norcost-effective to hire an attorney.

•For losses between $10,000and $100,000, an initial consultationwith a lawyer would be very helpful.

•If losses exceed $100,000, legalcounsel is highly recommended.

For an attorney with arbitrationexperience, contact the Public InvestorsArbitration Bar Association(888-621-7484; www.piaba.org).

2. Use all the evidence. Inaddition to evidence of bad advice,investors should strengthen theircase by using evidence that showsthe broker failed to follow theirinvestment guidelines or that therewas churning, misrepresentation, orfraudulent omission.

3. Gather the facts upfront.Investors should have all facts andsupporting documentation for theirclaim ready, including all agreementswith the broker, accountstatements, confirmation slips ontrades, and correspondence with thebroker or firm.

4. Properly notify the brokeragefirm. Investors should submit aStatement of Claim and Demand forArbitration to the brokerage firm, viacertified mail, return receipt requested.In the wake of the recent scandalsand Wall Street settlement, itshould be more difficult for the firmto have valid claims dismissed.

5. Know the limits of documentrequests. Investors will haveonly 1 chance to request relevantdocuments. Firms may object to documentrequests. Likewise, investorsmay object to document requestsfrom the firm that place an unreasonablecost and time burden on them.

6. Present your case clearly.When the case is heard, investorswill have the opportunity to presenttheir case in a courtroom-like setting,invite expert witnesses, andmake closing arguments. Theyshould hold faithfully to the factsand avoid overstating any suffering.

7. Follow up with the settlement.It should take 30 days for thepanel to review each case, andanother 30 days for any award to bepaid. If the award payment is notreceived on time, investors shouldsend a letter to the case administratorrequesting that the NationalAssociation of Securities Dealersrevoke the brokerage firm's license,with a copy of the letter sent to theirbroker via certified mail.

Weiss Ratings (800-

289-9222; www.weissratings.com) is the only US firm that regularly

reviews the commissions, services, legal track records, and financial health of the nation's

security brokers.