Arbitration VS Litigation Finance Frauds

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Wednesday, March 27, 2013

Arbitration VS Litigation Finance Frauds



In the investment market, financial fraud cases involves feeding the clients with unethical investment advice causing loss, unauthorized dealing in the client’s trading account, churning i.e. Excessive buying and selling of stocks that will ensure a good amount of income earning for the brokering company by means of brokering charges or financial loss by other ways. By means of the agreement signed by both parties, the stock trading firms are legally bound to provide their clients with expert opinion in accordance with their portfolio so that they can make good profit from their investment.


Image credit: mheld / 123RF Stock Photo 

In case of any of the above mentioned financial fraud cases, the clients have the right to file a lawsuit against the brokerage firm with the assistance of expert fraud solicitors for serious crime. Depending on the extent of the problem, number of sufferers and also the total expense that the client(s) are willing to spend, they can either go for arbitration or litigation. These are two different types of legal proceeding that a victim of financial fraud can call for.


Yardsticks for Choosing Which Kind of Legal Proceeding is Suitable for You

The Financial Industry Regulatory Authority i.e. FINRA has provided some guidelines which will help the victim to choose which legal proceeding is right for them. The factors are the amount of money lost from financial fraud, how many persons had fallen victim to trap and the total expenditure.

Litigation: A Cooperative Effort

In litigation, a class action case is filed before the concerned authorities on behalf of a group of clients who have suffered losses from the same cause. Here are some of the pointers on the basis of which litigation can be filed:
  • To make a bigger appeal and build a stronger case against a brokering firm.
  • All the investors who are participating in the class action must have suffered losses during the same time period.
  • The cost of litigation is much more, but since it is shared by all the wronged investors, none of them are burdened by it.
  • In litigation, the federal court at first reviews the joint appeal made by investors to determine whether it is a case of class action or not before allowing it to be argued in the higher court.
  • A competent attorney is appointed to argue the case on behalf of all the investors in whose account financial frauds have taken place.
Arbitration: A Solitary Option

Arbitration is the best option for those who want to place a lawsuit against the stock brokering organization for an illegal action on the part of the firm. Here are some yardsticks on the basis of which an investor must look for intervention for settling a dispute:
  • The amount of loss due to financial beating is not strong.
  • Only a single person’s investment portfolio was affected due to the illegal action of the representatives of the stock exchange firms.
  • The wronged investor has limited funds to spend on legal proceedings.
  • The investor wants the legal proceeding to drop off quickly.
In arbitration, both the applicant and the defendant present their arguments before a panel of three arbitrators. In accordance with recent amendments, the applicant or the wronged investor has the right to opt for a panel of three judges who have no relationship with security field and, therefore, can conduct impartial decision. However, in most cases it can be seen that the judgment of arbitrations is not in favor of the applicant or the investor.

In either of these two legal proceedings, the investor(s) have to arrange expert fraud solicitors for serious crime who have extensive knowhow about the legislation with regard to security fraud and, therefore, can take appropriate action accordingly. A joint appeal i.e. Litigation however has a stronger appeal but can be opted for only under some circumstances. Therefore, making arbitration the most common remedial for most. If you have been a victim of security fraud, then request for legal assistance as soon as possible to resolve the issue and receive compensation for economic losses.

Author: Angelina Jennifer 

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