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Home > Investor News > FINRA Arbitration Claims Skyrocket

FINRA Arbitration Claims Skyrocket

The summer of 2009 is predicted to deliver a heat wave of new arbitration cases for the Financial Industry Regulatory Authority (FINRA), the non-governmental regulatory watchdog responsible for overseeing some 5,000 U.S. brokerage firms.

The spike in claims stems from several factors, including ongoing turmoil in the financial markets that began with the subprime mortgage fallout. As a result, more and more institutional and individual investors are coming forth with claims of securities fraud, omission of facts and breach of fiduciary duty, negligence, churning, misrepresentation and other charges involving securities fraud against brokerage firms and individual stockbrokers alike.

New arbitration claims filed with FINRA in January and February 2009 rose more than 90% from those filed in the same period last year. The largest number of arbitration cases filed occurred in 2003 and 2004, reaching almost 9,000 after the implosion of the dot.com markets. As of May 2009, 3,163 new arbitration cases had been filed with FINRA.

If current trends continue, 2009 could very well match or break the highs set in 2003 and 2005.

Driving the 2009 increase in FINRA claims are complaints by investors involving specific investment products, including derivatives, auction-rate securities, collateralized debt obligations (CDOs) and enhanced cash funds.

Law school securities arbitration clinics also are feeling the effects of the rise in arbitration claims, with many seeing a substantial number of new requests for help from both individuals and institutions.

“It's really gone crazy in the last month,” said Professor Curtis Pew, director of the clinic at Hofstra University School of Law, in a March 30, 2009, article on Law.com. “We literally are getting a call a day, and from all over the country.”

If you are an individual or institutional investor and have concerns about your investments, contact Maddox Hargett & Caruso at 800.505.5515. We can evaluate your situation to determine if you have a claim.

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