Arbitration Versus Litigation in Financial Fraud Cases
Magistrate Court Room (Photo credit: DragonDrop)
Stock broker firms have a legal as well as moral obligation towards the investors listed under their banner, whereby the firm consents to provide the investors with profitable and lucrative recommendations in keeping with the financial objectives, net worth as well as preference of the investors. To perform this duty the broker firms should employ proficient trade analysts who could provide the clients with good advice in appropriate time. However, in many cases it can be seen that the stock exchange firms have failed to perform this duty and thereby causing huge loss to the clients. The cause of the loss can range from inappropriate suggestions, trading in the client’s account without permission, churning or any other financial fraud.
The Two Legal Proceedings
The Financial Industry Regulatory Authority i.e. FINRA has laid down some rules and regulations and for violating any of these clauses, which might result in monetary loss, the investors can file a suit against the firm and take legal help.
The wronged investors have two possible options to choose from when filing a suit against a stock firm i.e. arbitration or litigation. There are certain factors that will help the investor to determine which legal proceeding will be suitable for the investors. The factors are the amount of loss from security fraud, the total sum that the investor is ready to expend on the proceeding as well as the fact whether only a single person is wronged or there were multiple such cases against the firm.
Arbitration
In most cases, the investors opt for arbitration for redressing the offense. This is best suited for investors who been have swindle off by a comparatively small amount of money and have limited funds to spend. If an investor is fighting against an organization on his own, then this is the most suitable option for them. However, the investor would need a proficient security litigator who specializes in such security fraud cases to make a strong case against the firm and get compensation for his losses.
An Individualistic Fight
Arbitration is an individualistic fight where the applicant and the defendant present their cases before a panel of arbitrators. The arbitrators act as a negotiator between the two parties. They reassess the claims made by both the parties and try to come up with a solution that is acceptable to both and at the same time pertaining to the legal norms.
Faster and Cost Effective
You should hire expert fraud solicitors for serious crime. This is a much faster way of settling a dispute for security fraud. The claims of both the parties are placed before a panel of learned arbitrators in a conference room in a number of sessions to solve the problem and come up with a favorable solution. Thus, it is a cost effective way for redressing a problem.
Probable Possibilities
In most cases, it can be seen that the firms get an upper hand in arbitration. This is because of the complex regulations of arbitration which are observed by the panel of arbitrators during the proceedings. Moreover, whether the judgment is favor of the defendant or the applicant, only in some cases the loser has the option of appealing to a higher court.
Litigation
Litigation is another genre of legal proceeding where many wronged investors collectively present class action case before the concerned authorities. Therefore, the total expenditure for filing the case is shared by all those who have been wronged. Litigation has much stronger appeal as many investors join hands to redress a common issue.
Class or Group Action Lawsuit
Litigation can be submitted in a higher court against a stock broker firm when many investors get united for a common grievance against the firm. However, all the applicants must suffer financial losses during a common time period to file litigation. Once the suit is filed it is reviewed by the Federal Court to see whether the case subscribe to the stated norms of class suit or not. Thereafter, a petitioner is appointed to represent all the applicants.
Joined Action
Litigation is the best option if many investors of the same stock broker firms have been wronged during a particular period of time. They can make a large and strong case before the authorities to redress the wrongs. Since many applicants are participating in a joined appeal, the resources required for pleading their case will get divided and will not be too much for any of them.
Thus, whether an investor can go for arbitration or litigation depends on a number of quotients. However, they need to hire a professional security fraud lawyer who can present their case before the authorities tactfully and get the best compensation.
Category: Law
