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legal advise/ NASD arbitration

Discussion in 'Other Off Topic Forum' started by tifosi, Jan 9, 2004.

  1. tifosi

    tifosi F1 Veteran
    Lifetime Rossa

    Sep 5, 2001
    5,382
    texas
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    Tom D
    Here are the facts

    My personal records indicate I made a 2,000 check deposit at my broker in Dec 2001. The statement I got at that time supports this.

    In Dec 2003, over two years later, my broker posted a 2,000 deposit correction to my account, taking the money back.

    When I inquired last week about it they claim in Dec 2001 they posted a deposit made by another client twice - in his account and mine. They did not catch this until Jun of 2002 and corrected it by reversing the posting to the other clients account. recently the client must have realized they made an error and I assume provided support (ie cancelled check, deposit slip) that he in fact made a 2k deposit back in 2001. They researched it and now claim I must have never made the deposit. They will only fix my account if I can provide them with the deposit slip from two years ago. Of course I don't keep slips for two years nor do I remember what this deposit related too - after all it was one of hundreds of transactions in my account. I have taken this up the chain and despite having substantial assets at the firm they will not budge.

    I was wondering what you think my success would be taking this to the NASD arbitration process (which has jurisdiction in this case). I plan to argue that the internal controls at the firm must be really weak to have a deposit be posted twice and go undetected for years and that they are putting an undue burden on me to prove a transaction over two years ago. The process does not really cost much so I figured its worth a shot since I am out of options. Thoughts on this

    Tom D
     
  2. ty (360mode)

    ty (360mode) Formula Junior

    Sep 25, 2002
    807
    Houston
    Full Name:
    Tim
    of course, this is NOT legal advise, simply my opinions :) but have you filed a written complaint with the NASD and SEC, copying the brokerage firm's general counsel in question? as a former attorney for a large investment management company, there is nothing more annoying, bothersome, time-consuming, etc. than having to respond to regulators re client complaints. be sure to send to your particular SEC's regional and/or district office (go to www.sec.gov). you may want to try this route before starting some formal dispute resolution process. it shows your brokerage firm you are serious about your claim and know how to be a thorn in their side while also giving them an easier out if they choose to cooperate.

    good luck.
     
  3. tifosi

    tifosi F1 Veteran
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    Sep 5, 2001
    5,382
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    Tom D
    Thanks, I am in the process of formally disputing this amount with them but just wanted to think about my options if this does not work out.
     
  4. Ferrari 1

    Ferrari 1 Karting

    Nov 3, 2003
    175
    Fort Lauderdale
    Full Name:
    Benn Correale
    Perhaps I have missed something, but you can contact your bank, get a copy of the check (front and back) from Dec. '01, showing it cashed and deposited into your brokerage firm's account. That should settle the matter quickly, and at no cost or brain damage to you.
     
  5. tifosi

    tifosi F1 Veteran
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    Sep 5, 2001
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    Tom D
    it probably was a third party check and I have no recollection of who it was from - I use the brokerage account as my bank account.


    Thanks though

    Tom
     
  6. FLATOUTRACING

    FLATOUTRACING F1 Rookie

    Aug 20, 2001
    2,684
    East Coast
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    Jon K.
    Tom,

    Working in the industry and having some experience with NASD you're chances of winning are slim to none in most run of the mill cases.

    I can't comment on your particular situation but I have a cousin who was a mediator for three years for NASD and I know how they think.

    In addition before I got into this business I had to file a complaint and go through the process of NASD arbitration many years ago on behalf of my wife.

    A broker had churned (made hundreds of stock transactions to run up commissions) her account in a blatant manner and had her sign a margin agreement without explaining to her what it was or even filiing out forms to prove she qualified for margin trading (much harder to do before online trading came around).

    In short, the broker turned $15,000 dollars into 41 cents in the course of two years by buying and selling stocks every few days. He magnified the losses by trading on margin.

    In the arbitration findings we found out the broker had worked at 6 different firms in 10 years and had numerous complaints against him.

    We settled with the firm he worked at (had since left) for half the money before the case went to arbitration but at arbitration the NASD ruled in favor of the broker despite the fact that he was blatantly compromising his clients fiduciary duty.

    The NASD is no different than any other regulatory board that stocks it's boards with past employees of the industry.

    There is a reason every brokerage agreement contains language that you accept arbitration over other legal recourses.

    I seem to recall that only 20% of cases are ruled in favor of the client but that may have changed in recent years with the stock market crash.

    Regards,

    Jon P. Kofod
    www.flatoutracing.net
     
  7. tifosi

    tifosi F1 Veteran
    Lifetime Rossa

    Sep 5, 2001
    5,382
    texas
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    Tom D
    Thanks Jon, I appreciate the info on your experience and your insights. I am looking at as if I have nothing further to lose since they took the money already - I don't have to hire a lawyer and I think more recently they are more sensitive to customer claims given all the scrutiny around self regulation. If I end up going forward I will let you know how it turns out.
     

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