Broker-Dealers Press Clients to Settle Arbitration Claims, Says Illinois Securities Regulator

According to Illinois securities regulator Tanya Solov, brokerage firms are driving investors with securities arbitration claims against them to settle their cases. Solov says that they are doing this by barraging investors with discovery information requests. Solov was quoted at the yearly North American Securities Administrators Association Inc. meeting.

Solov said that broker-dealers’ discovery practices end up making the FINRA arbitration process more costly for investors. Such tactics, says Solov, are compelling investors to settle their securities cases rather than go into litigation. She also noted that while broker-dealers keep pressing investors into coming up with discovery material, many investment firms, when faced with a discovery request by an investor, have been known not to provide the information.

William Shepherd, a securities fraud attorney and the founder of Shepherd Smith Edwards & Kantas LTD LLP, represents many clients with securities cases against brokerage firms. He noted the challenges his investment fraud firm has had when trying to obtain discovery information for his clients: “Our firm responds in kind, fighting hard for discovery from the firms as well. We have invested in the latest technology to be able to process millions of documents and search these for clues. We do not let abusive requests thwart our goal and we protect our clients from such abuses. We refuse to be bullied by large financial firms who think they can run over investors and their attorneys. These firms now know we are ready, willing and able to fight them and most have abandoned such tactics against us.”

Related Web Resources:
B-Ds bullying clients to settle arbitration cases: Regulator, Investment News, September 27, 2010
North American Securities Administrators Association

Arbitration and Mediation, FINRA