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FINRA Being Inundated with Securities Fraud Claims

Feb 26, 2009 | Parker Waichman LLP Thanks to the likes of Bernard Madoff, Arthur Nadel and other financial scammers, a record number of people have been victims of securities fraud in the past year.  Many of these wronged investors have looked to the Financial Industry Regulatory Authority (FINRA) to settle their claims against brokers, financial advisors and others who have failed in their fiduciary duty.

According to the Associated Press, there were 4,982 disputes filed with FINRA last year.  That's a  54 percent increase over the previous year.  According to its website, FINRA is  the largest non-governmental regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 172,000 branch offices and approximately 663,000 registered securities representatives.  Any organization registered with FINRA is subject to the agency's arbitration rules, the Associated Press said.

But according the Associated Press, there are several things investors need to know before they file a case with FINRA.  First of all, there are fees involved.  According to the Associated Press, the filing fee ranges from $50 to $1,800 depending on the size of the dispute.  In arbitration, there is also a daily fee that ranges from $50 to $1800.  Again, the amount of a claim, as well as the number  arbitrators needed to hear it, will determine that fee.

In bringing a FINRA claim, it is important to retain a lawyer.  Most law firms are willing to handle large claims on a contingency-fee bases.  But if a case is under $25,0000, most lawyers will charge clients an hourly fee, the Associated Press said.

Regardless of whether a fee is hourly or contingency, using a lawyer for a FINRA claim is worth the investment.  An attorney that specializes in securities fraud will know how to file a claim with FINRA.  He or she will also be able to determine if it is worth seeking a settlement with a FINRA-appointed mediator.  According to the Associated Press, fees for such mediation range between $50 and $300, and can also include travel and other expenses for the mediator.

When a claim moves to arbitration, it can take as much as 15 months to reach a resolution, the Associated Press said.  However, claims for amounts under $25,000 can move much faster, as they are often decided on the basis of just a document review.

According to the Associated Press, victims of securities fraud generally find some relief with FINRA.  About  70 percent of the cases filed with FINRA are settled through mediation or directly between the parties, which usually means some type of compensation for securities fraud victims.

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