Securities Fraud Arbitration Process

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Investors who have been the victims of stock broker misconduct may think that suing their stock broker is too complicated and might not be worth their effort. However, according to securities fraud attorneys, the process might not be as arduous as you might have expected – providing you have the right securities fraud attorney on your side.

Securities fraud lawyers will look at a client’s account statements to see if there’s been any wrongdoing. They’ll also interview the client to get their account of what happened. The lawyer will then either accept or decline the case.

At that point, they’ll prepare what’s called a statement of claim which will be filed with either the NASD or the NYSE who then sends it to the defendant / respondent. After an answer is filed, the discovery process begins. However, unlike a traditional lawsuit, there are no depositions – only a simple exchange of documents. Afterwards, a three-day hearing is set in the major city closest to where the client lives.

If you were afraid of being thrown to wolves, think again. It takes about a year to 18 months to complete the securities fraud arbitration process and clients generally have continual contact with their securities fraud attorney as they prepare for the hearing.

The attorney will pick a panel of three from 10 to 14 possible panel members. They’ll put witnesses on the stand and go through an evidentiary hearing. Within 30 days, that arbitration panel must rule on the matter. If you win, that money must be paid by the respondent within 30 days. The process replaces a trial in state or federal court – and there is generally no appeal. In fact, courts may threaten sanctions on those who file appeals.

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