Posted in: FINRA | Arbitrations | Ponzi Schemes | Risky Investments | Lehman Notes | Medical Capital Notes |
The Financial Industry Regulatory Authority is preparing for a year full of stockbroker arbitrations.
Since FINRA hears almost every complaint against a broker in the country, they are expected to field an unprecedented number of disputes following the collapse of three mutual funds and billions of dollars worth of private holdings.
The former customers of Morgan Keegan & Co. say their bond funds fell as much as 82% after the housing meltdown. The firm has been named in about 400 arbitration claims so far, according to the Wall Street Journal, with only 79 of those cases having been heard.
In response to the massive caseload on the horizon, FINRA is increasing its available arbitrators in each city from 87 to 721. As we mentioned on this blog, the number of arbitration cases increased 43% in 2009.
“We’ve never done this on this kind of scale,” said Linda Fienberg, FINRA’s president of dispute resolution.
In December 2009 a FINRA arbitration panel awarded an individual investor $200,000 because a UBS broker improperly sold her Lehman Brothers principal protected notes. Major brokerage houses including, Citigroup, JP Morgan Chase, Merrill Lynch and Wachovia sold Lehman notes, and may be named in additional complaints this year.
Not to mention that ABC News and InvestmentNews both called 2009 ”The Year of the Ponzi.”
FINRA arbitration panels usually contain three-member panels, with one member holding ties to the securities industry. While a huge spike in arbitrators could mean new jobs for out-of-work Wall Street vets, it will hopefully expedite the arbitration process for the investor.
It is bad enough for an investor to learn of broker misconduct, to see his or her investment lost and having to worry about getting it back. These investors should not have to wait too long before their cases are heard.
