Should I represent myself in FINRA arbitration or do I need a lawyer?

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?

Laguna Hills, CA -

Attorney Answers (5)

Robert V Cornish Jr.

Robert V Cornish Jr.

Securities / Investment Fraud Attorney - Washington, DC
Answered

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.

Best,

Bob

The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client... more
Steven Alan Fink

Steven Alan Fink

Real Estate Attorney - Newport Beach, CA
Answered

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... more
Frank Wei-Hong Chen

Frank Wei-Hong Chen

Litigation Lawyer - San Marino, CA
Answered

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.

http://www.finra.org/ArbitrationAndMediation/Ar...

If you need help finding representation, see:

http://www.finra.org/ArbitrationAndMediation/FI...

The information presented here is general in nature and is not intended, nor should be construed, as legal advice.... more
Michael Charles Doland

Michael Charles Doland

Business Attorney - Los Angeles, CA
Answered

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... more
David W Schmidt

David W Schmidt

Securities / Investment Fraud Attorney - Cranford, NJ
Answered

.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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