Douglas F. Stone Investments Law Blog on Lawyers.com

You lost a lot of money that you invested with your broker and you believe he or she is responsible and should return your lost money.  You may be asking yourself if you have a strong case against your broker or the brokerage firm.  What should you do?

First gather all documents you have from the broker, like new account documents, account statements, trade confirmations, sales literature and correspondence, including e-mails.  Then review these documents to identify how much you lost, in which investments you lost money and over what period of time.  If you believe the broker is responsible, you must identify what the broker did wrong, and how much of the loss was caused by the broker’s conduct.

To recover money from the broker or firm, you must be able to show that you lost money and the broker caused the loss.  It is not enough to show that you lost money.  Many people lost money when the market went down.  You must show that misconduct by the broker caused your loss.  

When you opened the brokerage account, the broker was required to obtain information from you that defined your investment goals, risk tolerance, investment experience, net worth and income.  The firm is required to keep this information.  Securities laws require that any investment recommendations the broker makes must be suitable for you, based on this information.

After you have gathered the account documents and analyzed how you lost money in the account and why you believe the broker was at fault, it helps to write a chronological narrative of what happened.  You should describe how the broker presented any investment recommendations and whether he disclosed the risk.  At that point, it may make sense to find a lawyer who has experience with investor disputes and FINRA securities arbitration.  If you want to recover your investment, you want to go to a lawyer who specializes in this area.  You would not go to an eye doctor for a foot injury. 

An experienced securities arbitration lawyer will know what to look for and should be able to give you an idea of your prospects for recovery.  He or she can analyze your portfolio performance and discuss possible liability of the broker and firm.  An experienced lawyer can explain the securities arbitration process, how similar cases are presented by both sides and your prospects, based on results of similar cases. 

Your chance of success is much greater if you can provide documents that support your claim.  For example, if you claim that the broker recommended unsuitable investments, it is very helpful if you have documents that show that you provided conservative investment guidelines to the broker but he recommended an aggressive investment.  The account activity shown on the account statements may show that the investments recommended by the broker were not properly diversified.  Many cases boil down to the customer’s word against the brokers’.  Your chance of proving your case and recovering dollars will be much greater if you can provide supporting documents. 

NYC and Westchester securities fraud lawyer Douglas Stone focuses on securities industry disputes.  Mr. Stone has handled hundreds of investor disputes nationwide involving Morgan Stanley, Merrill Lynch, Smith Barney and other firms.  He worked as in-house counsel to Morgan Stanley and Smith Barney before opening his firm.  Mr. Stone also serves as a FINRA arbitrator.  He can be reached for a free consultation at 866 720-3754 or by e-mail at dstone@dougstonelaw.com.