What Investors Need To Know
You’ve lost money due to what you believe is broker misconduct. Your first instinct might be to “sue them” in a traditional court of law. You’ve seen it on TV: lawyers, a judge, a jury box. But for investors, the reality is very different.
The path to justice almost always runs through FINRA, not the courthouse. The key document isn’t a “lawsuit”; it’s a “Statement of Claim.” Understanding the difference is the first step toward recovering your losses.
The Predispute Arbitration Clause: The Document You Signed
When you opened your brokerage account, buried in the mountain of paperwork was a document called a customer agreement. Virtually every one of these agreements contains a predispute arbitration clause.
By signing it, you agreed that any future dispute with the firm would be resolved through binding arbitration, specifically through the forum run by FINRA. This clause effectively closes the courthouse doors to you for most claims.
Is this fair? That’s a debate for another day. Is it legally binding? In almost all cases, yes. The Supreme Court has repeatedly upheld these clauses.
Key Differences
Arbitration vs. Lawsuit
| Feature | FINRA Arbitration (Statement of Claim) | Court (Lawsuit) |
| Decision-Maker | A panel of 1 or 3 neutral arbitrators | A judge and/or jury |
| Process Speed | Generally faster; typically 12-16 months | Can take years due to crowded dockets |
| Cost | Generally less expensive than court | Can be extremely expensive |
| Rules of Evidence | More relaxed; focus on relevance | Strict, formal rules of evidence |
| Appeals | Extremely limited grounds for appeal | Extensive appeals process available |
| Privacy | Private and confidential | Public record |
Statement of Claim
So, Why Is It Called a “Statement of Claim”?
Because that’s precisely what it is. It’s your formal, written statement laying out:
- Who You Are: The investor.
- Who You’re Suing: The brokerage firm and/or individual advisor.
- The Story: A factual narrative of what happened.
- The Misconduct: The specific rules or laws that were broken (e.g., unsuitability, fraud, breach of fiduciary duty).
- Your Damages: A calculation of exactly how much money you lost due to the misconduct.
This document is the foundation of your entire case. A poorly written Statement of Claim can get your case dismissed before it even starts. A powerful, persuasive one puts the brokerage firm on its heels from day one.
Don’t get lost in the legal jargon. Get expert help.
Filing the right claim in the right forum is critical. Our team knows how to draft compelling Statements of Claim that get results. Let us review the details of your situation.