Plaintiffs' Personal Injury Law Firm

Finra

The Financial Regulatory Authority, also known as FINRA, oversees more than 5,000 investment brokerage firms across the country and they have seen a marked increase in arbitration cases. The cases range from breach of fiduciary duty, mishandling funds, stockbroker fraud and misrepresentation to name a few.

The number of claims for the first five months of last year totaled 1,711. But in the same five months of this year, FINRA has seen an 85% increase with 3,163 claims filed. The number of firms that have mishandled their client's investments and the number of brokers that have mislead their clients or misrepresented investment information is definitely rising every year.

FINRA replaced the National Association of Securities Dealers in July of 2007. They are not an agency run or overseen by the government but rather the watch dog for the securities and investment firms. Besides making sure that policies and procedures are followed they enforce rules and regulations and serve as arbitrators for cases involving financial firms and their investors.

At the top of the list in securities litigation is investment fraud. When the housing industry and mortgage market crumbled in 2007 there were 3,238 fraudulent claims against stock brokers filed. In 2008, the number of cases rose to 4,982. Experts are citing that at the pace that cases are being filed, the number of cases filed will reach around 7,000 by the end of 2009. This would mean cases have almost doubled in the past two years.

Besides the increase in claims, thanks to new SEC rulings investors are enjoying more positive outcome in their cases against fraudulent investors. The SEC has put restrictions on the defendant's capacity to file a motion to dismiss. The rulings were put into place so that more claimants could get their cases heard before the defendants delayed the hearings to buy time and increase court costs. The increased fees would often deter claimants from starting or continuing the arbitration process.

FINRA has been siding more in favor of the claimants with a 5 percent increase since last year. More than 47 percent of investors who filed for securities arbitration this year won as opposed to 42 percent last year. And more than 1,718 cases were due to breach of fiduciary duty.

When a broker or financial advisor is accused of breach of fiduciary duty he must prove that he has acted in the best interest of his or her client. A breach of fiduciary duty would include the stockbroker pushing a client to an investment that is not right for them or even one where he or she would realize more of a profit than the investor.

Because of the increase in arbitration and the growing lack of trust in investment firms and their brokers, investment planners are looking to Congress to put some national regulations in place to bring some validity back to their field. With the industry the way it is right now, anyone can claim to be a financial planner and the possibility of even more securities fraud is imminent.

If you have been a victim of security fraud in any manner, contact the law office of Napoli Bern Ripka and let our trained professionals help you recover your losses through securities arbitration. Call today for a free consultation -1-888-LAW-IN-NY.