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You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Did your broker agreement contain a mandatory arbitration clause?

You relied on your broker to make responsible decisions regarding the investment of your money. You figured that he or she possessed the expertise and knowledge required to handle that job. Otherwise, you may have simply made investments on your own.

Then, you began to suspect that your broker may not have lived up to his or her end of the bargain. Poor decisions based on any number of factors may have cost you a significant amount of money. You want to file a lawsuit against your broker seeking damages, but discover that your claim is subject to mandatory arbitration in accordance with the agreement you signed with the broker.

What do you give up in mandatory arbitration?

In many cases, mandatory arbitration could mean the following:

  • You relinquish the right to file a lawsuit or participate in a class action lawsuit.
  • More than likely, the arbitrator's decision is binding, which means you may not appeal that decision.
  • Your agreement may allow the broker or the firm he or she works for to choose the arbitrator.
  • You lose the right to set the time and place for the proceedings.
  • Any monetary award in arbitration may be less than possible in a court proceeding.
  • Arbitration does not require a formal discovery process, including taking depositions.

You may employ the services of an attorney to represent you during the arbitration, but you may end up doing so at your own cost if your agreement does not allow for the payment of the attorney's fees as part of the arbitrator's decision.

What do you gain in mandatory arbitration?

Despite the potential downsides listed above, you may receive the following benefits from the process:

  • Not having to engage in formal discovery can save you time and money.
  • Your agreement may allow you to participate in choosing the arbitrator, which allows you to retain more control over the process.
  • In the majority of cases, arbitration turns out to take less time and money than the litigation process.

You also are not required to have an attorney represent you in arbitration, but going it alone could cost you more than just the money you lost from your broker's breach of duty.

Take advantage of the help available

If you have not yet signed an agreement with a broker, you may benefit from having it reviewed by an attorney. He or she can read the fine print and determine whether you will be bound to participate in mandatory arbitration should a dispute arise between you and the broker. This allows you to make an informed decision before moving forward.

If you signed the agreement and now find yourself in a dispute, you would more than likely benefit from having an experienced securities law attorney on your side who routinely represents clients in arbitration proceedings. You can gain a thorough understanding of what to expect, along with assistance in gathering and presenting the best evidence possible to achieve your desired outcome.

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