When Your Broker Mishandles an Account

Brokers are hired to help you improve your investments. Their experience in the industry is very valuable and their knowledge in harnessing the stock market is very important. Doing things without the help of brokers is possible but it could be costly and time consuming.

With the help of a broker, your accounts will be taken cared of even though you are not focusing on your investments all time. Your job is only to monitor the movements of your shares while reaping the benefits.

Unfortunately, there are situation wherein you will be ripped-off by your broker. You could be charged too much for commission based or were given a very bad recommendation that have led to the downfall of your shares and stocks.

A failing portfolio could be attributed to external factors that could not be controlled by anyone. But there are situations wherein downfall of portfolio or shares that could be the fault of brokers.

Initiating the Complaint

If you think something wrong was done in your account, it is recommended to talk to the broker first. You cannot just charge in and accuse anyone. As much as possible, get your brokers side of the story so that you can understand what happened. If you cannot accept your broker’s side of the story, escalate the complaint to your broker’s firm. They will look into the situation and will make any decisions based on their findings.

Be professional in your complaint. Because you have been ripped off does not give you the right to attack the firm and spread lies about the company. Remember that you could be charged by the law if you do not act professionally. In presenting your case, be sure you know what you are complaining about and would have considerable proof.

FINRA and Mediation

There are companies who will acknowledge their fault and would like to settle. You should get the help of FINRA or the Financial Industry Regulatory Authority. They are a government institution whose function is to be an arbitrator if there is no agreement that the firm is at fault. FINRA will be the arbitrator and will ensure that the agreed terms and conditions are followed.

You should get a lawyer familiar with the rules and restrictions in the industry. This could be very costly but you cannot succeed in arbitration if you do not have a lawyer.

Unfortunately, setting a schedule for FINRA could take months or even years. If you do not have a high profile case that deals with billions of dollars, you could be waiting for months for an arbiter from FINRA. That does not even include the delays that could be presented by the firm.

Mediation is faster than arbitration as it will never require the help of FINRA to determine the compensation. Instead of the help of FINRA, both parties will submit the proposal for approval. Although there would be a short hearing to affirm the statements, it will be a lot faster.

If your case requires a compensation that exceeds $25,000, there would only be a single arbiter to hear the case. For compensation that exceeds $25,000, there would be three-panel arbiter that will hear the case.

The Importance of an Expert

Aside from a lawyer, you need to have an independent expert in the industry who will agree to become a witness and affirm the bad business practices of the broker. An expert may not have evidence but the expert will be your resource person that could be presented to FINRA.

Going after the broker that mishandled your account is difficult and time consuming but it is possible. Through FINRA, you should be able to be compensated with your losses.