Securities Law: 10 Steps to Suing Your Broker

As nearly half of all Americans own no stocks at all, one of the reasons for that is that there are so many complicated laws surrounding their finance.

If your stockbroker breaks securities law, you have the right to sue. However, if you don’t know the first thing about the law, you could end up not getting the money you deserve.

Here are the four main steps to suing your broker.

1. File Your Claim On Your Own

The first step that you need to take to sue your broker for violations to securities laws is to get your claim on the books.

You can file a claim all by yourself, or you can have an attorney do it for you. You can file a claim on your own, and it’s even as easy as filing it online using the FINRA site to get the process started for free.

This field is highly specialized, so it’s tough for a layperson to file a claim properly.

When you file on your own, the FINRA will break your claim down into the type of claim that it falls under. If you’re dealing with a claim that’s under $25,000, it’ll be considered a small claim. These are usually handled in writing.

If you’re dealing with a larger claim that totals more than $25,000, it’s considered the type of claim that will require a hearing to occur.

If there’s a case of negligence in the instance of a smaller claim, that’s a great reason for representing yourself during the arbitration. Paying $10,000 for a $12,000 claim is more or less a waste of time and money.

When things get harrier, you might need to consider hiring a lawyer.

2. Dealing With a Lawyer

If you don’t have the time or energy to handle your case on your own, you might want to seek out an attorney. You also have a higher chance of winning your case if you’ve hired an attorney to handle it.

Look for a lawyer who has a track record of handling cases like yours and winning. They should also be able to tell you if you’ve got a valid claim or not. Your lawyer can estimate the potential value of your claim to ensure that it’s worth both of your time and effort.

If you’re dealing with a brokerage issue, you’ll need to get a securities attorney.

Lawyers take a huge percentage of what you’ll receive. You might want to calculate this into your claim. If you’re paying 25% or 33% of your claim out to your lawyer, you might want to reconsider your securities claim. They might even have a minimum that you need to reach before they consider your case.

If you don’t hit this minimum, you’re talking about a chunk of cash considerably larger than that one-third of your settlement.

Your filing fee alone could cost around $4,000. Then you’ll pay a hearing deposit, and if you want an expert5 witness provided by your attorney, that could cost you another $2,000.

You should get advice from a lawyer no matter what the cost of your securities fraud claim. They could reveal deeper issues than you noticed or they could point out problems that will mean that you could be building a weak case against your broker.

3. Get your Evidence Together

Your claim is only as strong as your evidence to support it. Attorneys will tell you that you need to get your statements, any correspondence that exists between you and your broker, and paperwork that you think might help your case.

If you took any notes during or after conversations with your broker, this is evidence to consider. If you have meetings and anyone else was present, the should testify to help you out.

Remember that your broker will surely be gathering evidence as well. They’ll have every document that you’ve ever signed. They’ll be able to prove that you opened an account or that you bought the securities you’re discussing and will be able to give essential details.

The attorney for your broker will end up having a look at everything and will be building a case against you even as you build one against them. They want to undermine and minimize the legitimacy of your claim in whatever way they can.

Both sides will be aggressive and will even be trying to ratchet up the emotions of each other. Don’t be afraid to pull out all the stops to get every essential piece of information you need.

4. Working Through The Process

While it can take a while to get the hearing that you’re looking for, it might be as long as a year if you’re trying to make a claim that’s more than $25,000. Small claims for securities issues will typically be resolved much faster, often in just a few months since they are usually less complicated.

When you deal through arbitration, you’re not dealing with a lawsuit. There’ no judge to deal with and instead of that well-known process, you’ll have to choose from a list of arbitrators. Some public arbitrators work alone to decide any case that has a value of $25,000 or less.

Usually, you’re dealing with a panel when you’re dealing with larger cases. These panels will number around three people. They’ll include two public members and one expert who comes from within the industry.

If you end up with a public arbitrator, they aren’t allowed to have worked in the securities industry for at least the last five years.

Hearings can take a day to a week depending on their complexity.

Securities Law Might Be Too Complex For You

When you’re trying to understand the nuances of securities law, you could end up quickly feeling overwhelmed. A certified stock market attorney can ensure you get the settlement you deserve from your broker.

If you think it’s your investment advisor’s fault that you’re in hot water, check out our guide for more information.