I lost $100,000 to a Ponzi scheme that my advisor billed as a safe alternative to bonds and stocks. It was a "private placement," which according to a friend of mine who is a FINRA licensed stock broker is a type of investment for the very wealthy only. I had no income and was trying to open a business when my advisor put me in this program. I have quite a bit of evidence and a witness proving the broker made these claims. Should I save myself the money and represent myself in FINRA arbitration against him or do I need to hire a lawyer?
Securities / Investment Fraud Attorney
I am a securities attorney who handles both defense and prosecution of arbitration matters, and I am also a FINRA arbitrator, chairperson trained. The FINRA Code of Arbitration Procedure, which governs how your matter will be handled, is fraught with traps for the inexperienced litigant. Namely, your discovery obligations are mutual to those of the defendants. Also, alleging claims in the "ponzi" context you describes not only deals with the suitability of the investment as recommended by your broker, but also the "due diligence" performed on the investment by the broker's firm. You say you have "evidence" - will you use it as exhibits to your claim or do you think you'll be able to introduce the evidence on your own? Do you know the mechanics of introducing evidence to a finder of fact and law? Do you know how to form the foundation of questions for direct and cross examination? Do you know when to object to evidence and why? Are you well-versed in securities law not only on a federal level, but also on state causes of actions against the firm, the broker and whomever was supposed to be reviewing his emails and correspondence to you? Is there a bankruptcy involved with the issuer of the security and have you filed a proof of claim? Are you barred from proceeding?
My humble opinion -- unless you really know what you're doing, you will be in for a very long ride. Arbitrators certainly give leeway to pro se clients -- but as much as one might think. You're bound to the rules just as much as the next person. And what does appearing pro se in a six-figure case convey about the importance of the case to others across the table from you?
Food for thought. Hope it helps.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
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Real Estate Attorney
Given the amount at stake you want an attorney experienced with representing consumers in FINRA cases. Do not be pennywise and pound foolish. The attorney will pay for themselves many times over in improving your chances for a recovery.
The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of California. Responses are based solely on California law unless stated otherwise.
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5 lawyers agree
You really should have a securities lawyer represent you in the FINRA arbitration proceedings to provide direction and advice.
There are many rules which govern such arbitrations which might make your head spin.
If you need help finding representation, see:
The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.
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4 lawyers agree
I am a FINRA arbitrator as well as having a law office. It's not manditory but helpful. I have seen some attorneys in FINRA arbitration who were horrid, but the ability to organize volumes of documents and present a cogent argument is helped by a competent attorney. Perhaps you should assemble a trial notebook and get a bid from an attorney to review it. Bottom line, I would get an attorney, or at least a legal review.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
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Criminal Defense Attorney
.I have been handling FINRA arbitrations for many years. While it is possible you will be successful handling this matter on your own I would strongly urge you to retain counsel. There are at least two issues implied by your question. One is whether you have been the victim of a Ponzi scheme which usually involves a broker selling you an investment "away from" or without the authority of his brokerage firm. In this situation "failure to supervise" is a critical component of your case. The other is whether you were sold a private placement even though you may not have been an “accredited investor” or a suitable candidate for such an investment. These are two very different scenarios. These cases get complicated. You need to ask the other side for the proper documents and be in a position to ask the right questions at the hearing.
Getting a lawyer would be money well spent.
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