Wednesday, December 3, 2008

FINRA Arbitration Filings Up 49% Over Last Year

The market downturn is only a few months old, and FINRA filings are already up 50%. Through October, 3,972 cases were filed. We won't see the levels of 2001 to 2004...yet, but we will wait to see what is filed after everyone goes to their accountant for taxes in the next few months.

No big surprises in the controversies - the constant favorite "breach of fiduciary duty" tops the list, despite the fact that most brokers are not fiduciaries to their clients. Second is "Misrepresentation", "Breach of Contract is third, "Negligence" is number 4.

I have no idea how FINRA pulls those statistics together, but the one that I found interesting is that there were only three cases filed, all year, regarding online trading and only 44 regarding margin.

In the types of securities, involved, it is no surprise that "Common Stock" leads the pack, but there are three new categories this year, Variable Annuities (38) Derivative Securities (674) and Auction Rate Securities (264).

Half of the cases are still resolved by settlement (actually 58% between settlement and mediation) and only 23% by hearing. The rest are withdrawn, stipulated awards, and other reasons.


FINRA - Dispute Resolution Statistics
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