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Mutual Fund Arbitration
These are some frequently asked questions in regards to bringing a suit against your broker and his firm, and the services of Shepherd, Smith & Edwards.
Q. Who conducts the arbitration proceedings?
A. The three main forums for resolving securities
arbitration disputes are:
- The National Association of Securities Dealers, Inc.
- The American Arbitration Association
- The New York Stock Exchange
We recommend using the NASD forum as it is cheaper and more consumer friendly.
Q. How does arbitration work?
A. Arbitration is much like a trial except instead of a judge and jury you get a panel of one to three arbitrators which act as both judge and jury. They hear and weigh the arguments and evidence of both sides of a case, then render a binding decision. The arbitrators generally include at least one "industry" person. Arbitrators may include accountants, attorneys, sales representatives, bankers, educators, retired judges and other professionals. Unlike court proceedings, arbitration usually doesn't involve depositions, motions, or appeals. It's usually much faster and cheaper than civil court. The average time is 12 months from filing to first hearing versus more than two years in state or federal court.
Q. What is a predispute arbitration clause?
A. Virtually every securities broker includes in their standard new account form a clause that requires you to pursue any grievance through arbitration proceedings instead of the court system.
Q. How much will it cost to file a Statement of Claim in an arbitration proceeding?
A. Each forum charges its own filing, administrative and hearing fees. The average filing fee with the NASD is approximately $1200. The greater the amount of your claim, the greater your filing and administrative fees will be. If the case settles before arbitration, a portion of this fee may be returned.
Q. What other costs are involved?
A. Although our initial consultation is free, you can expect to incur expenses related to preparing a damages exhibit for purposes of mediation and/or arbitration. If the case does not settle before arbitration (the majority do), then an expert witnesses may have to be retained to testify on your behalf. Although we are essentially experts on securities fraud, we, as your attorneys, can not testify. We have relationships with the services of numerous nationally recognized experts in the securities industry. We also charge a one time "sundry costs" fee for courier and mailing costs, photocopying costs and any other incidental expenses incurred by Shepherd, Smith & Edwards in pursuit of a client's claim. Other legal fees will be discussed in advance.
Q. How does Shepherd, Smith & Edwards set its fee?
A. We work on a contingency fee: if you recover nothing, you pay no legal fee. If you recover any or all of your claim, you pay Shepherd, Smith & Edwards a percentage of the amount recovered after expenses have been deducted.
Q. What are my odds of recovering money?
A. According to the Securities Arbitration Commentator, a periodical publication which had studied the statistics of securities arbitration cases, 80% of all customer cases settle with some monetary award in favor of investors prior to the rendering of an arbitration award with the remaining 55% of those case which do not settle resulting in some arbitration award being made to the customer. Shepherd, Smith & Edwards can provide no assurance that there will be a recovery in any arbitration proceeding. However our decision to accept a case is our belief that it has merit and that some recovery of money is warranted.
Q. Is it worth all the time and trouble?
A. It's up to you. Consider that you'll be asked to
come up with copies of your financial records and tax
returns. There are also other questions about your
background and experience that must be answered. You
must decide if you want them to get away with their
conduct and the way they treated you.
Disclaimer: By providing the information contained in
the web site, Shepherd, Smith & Edwards does not expressly or
impliedly agree to provide any legal advice or legal
work product to anyone unless a mutually-executed
retainer agreement has been signed by this firm and
the client. Investors should also note that statue of
limitations for claims against securities brokerage
firms and their brokers may serve to bar investor
claims which are not filed in a timely fashion. Any
investor who thinks he or she may have a claim should
file a complaint with the Courts or a statement of
Claim in arbitration as soon as possible.
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