Do you dare sue your broker?
- The answer is yes if you have the makings of a claim.
- FINRA has a specific dispute resolution arm to resolve disputes between you and the broker.
- Only stop if you talk to counsel and they evaluate the merits and they don’t think you have a claim.
“Do you dare sue your broker? The answer is yes if you have the makings of a claim. That’s what the system is there for. That’s why FINRA has a specific dispute resolution arm, is to resolve disputes between you and the broker. The real reason I bring this up is because I see a lot of misinformation on the internet. Specifically, a lot of searches revolved around this topic come up with an Investopedia article titled, “Do you dare sue your broker?” And it’s full of chock-full, just misinformation and clearly, the person who wrote it doesn’t know anything about the process of bringing a claim against your broker. I looked up the individual who wrote it and maybe he’s well-meaning, but he lives in Germany and teaches English. Not exactly a resume for giving clear advice as to what it’s like to bring a claim but there’s a couple of points that he makes in the article that I wanted to specifically address, that really just are not true. So the first one is that you’re taking a huge risk of having to pay the broker-dealer’s attorney’s fees if you don’t win. And that’s basically the main crux of his argument, is that if you bring a claim and lose, they’re going to wind up with big attorney’s fees and you’ll have to pay those. That’s simply not the case. While it is theoretically possible that if a panel determines that a claim was brought entirely frivolously, it would have to be verging on malicious, they could award attorney’s fees against the claimant. So I can’t say it’s not possible. But it’s not likely. I’ve never seen it happen in the 13 years I’ve been doing these claims. I’ve never heard of it happening to a claimant that brought a good-faith claim that they have a responsibility for the broker-dealer’s attorney’s fees. Just not a meaningful risk in bringing the case. The second main issue is that he writes in the article, is that the broker-dealer will use all sorts of lawyer tricks and different things to avoid the main topic. Well, true to a very small extent. That’s what the one upside of arbitration is that there’s not all the same kind of maneuverings that you can do in court. There’s not a lengthy discovery process where they can drag the claimant through depositions and interrogatories and all sorts of things that really make it difficult to bring a claim against a large company. There’s also not really much in the way of motion practice. There’s no motion for summary judgment, there’s very limited motions to dismiss. And so a lot of tricks as we say that the defense lawyers use in court cases to prevent a claim from being heard on its merits; those tools just aren’t available to an arbitration. And so, again, it’s not the meaningful concern. Third and final issue he raises is that you can’t trust lawyers who are trying to sell you litigation, to be honest about your chances. Well, I think that’s a little bit of a jaundice view of the profession, as I think most lawyers are going to be upfront and honest and honor their fiduciary duties. In this context, it’s especially inapplicable because the lawyers, like our firm, who take on these cases on a contingent fee. Meaning we have the exact opposite incentive to try to convince you to bring a case that has no merit. That means we’d just be working for free. Because we only get paid if we win and we actually recover for it. And so there’s no incentive at all for a lawyer when they’re evaluating a claim for these types of cases to give you bad advice or to tell you you have a claim when you don’t. And so if you think you do have a claim what should stop you is not whether you dare sue your broker, what should stop you is if you talk to counsel and they evaluate the merits and they don’t think you have a claim. That’s fine, that happens. But certainly, if you think you have a claim you should bring it to somebody, have him take a look at it, and see if in fact you have the ability to recover.”
The Securities Lawyers practice group at Halling & Cayo, S.C. can help. We take cases all over the country, and we only get paid if we win. Contact us to set up a meeting to review your case.