Angry investors sue brokers
Knight Ridder Newspapers
Suddenly securities lawyers are on TV, they're in your mailbox and they're popping onto your computer screen. They know you've lost money in the stock market and they want you to do something about it. They want you to go after your broker.
The stock market collapse that caused major dollar losses in most portfolios has moved investors and lawyers into action. With some $8 trillion in stock market wealth disappearing recently, many lawyers have smoothly retooled their marketing hype to target a new frontier of potential clients -- those who blame their stockbroker for their losses. Lawyers who defend brokers say they, too, are swamped.
"The reaction has been overwhelming," said John Getz, a lawyer with Feldman Dickstein &; Getz in North Miami Beach who has been advertising on CNBC, CNN, MSNBC and Fox News. "No one looks closely at their accounts when they're making money. They don't recognize they should be making more. They are getting their statements and it's a horror. They are about to have a heart attack when they see me on TV and give me a call."
Scott Link of Ackerman, Link, &; Sartory in West Palm Beach, Fla., targets wronged investors through ads in national newspapers.
"I've received responses from little widows who lost $200,000 to corporate executives and money managers who lost tens of thousands of dollars," Link said.
Instead of suing in court, most investors are forced to file a claim with the National Association of Securities Dealer dispute resolution forum. It's a standard stipulation investors almost always agree to when they open a brokerage account. The NASD arbitration and mediation programs entrust an individual or panel to determine whether aggrieved parties are entitled to recover damages. Arbitration is binding, mediation is voluntary. Most claims brought in 2002 were for breach of fiduciary duty.
Link cautions that simply losing money is not enough to pursue a claim against a broker. Viable claims, he says, are those that deal with suitability (an elderly person relying on income and invested in speculative tech stocks), concentration (too many shares of stock in a particularly industry) or misrepresentation (brokerage marketed a risky investment as solid).
He said statements for a two- to three-year period serve as evidence for these claims. Brokers must turn the statements over to him if requested, he said.