If investment banking customers think that Securities and Exchange commission (SEC) and other financial industry regulators (e.g., FINRA) will protect the customers against brokerage firms’ misconduct, they are deeply mistaken. If there is suspicious activity pointing towards a possible fraud, the arbitration clause in the customer agreement forces parties to go through an arbitration.
In the customer’s experience, the arbitration process is unfair and biased. The brokerage firms hire big law firms and customers with no legal education are already at a disadvantage. Customers do not get any assistance from any entity unless they hire attorneys and pay hefty fees. PIABA is an organization that may help some customer find an attorney on a contingency basis.
The independently contracted arbitrators apparently side with the brokers and favor the brokerage firms. Any amount of incriminating proof is irrelevant to the arbitrators. It is unlikely that a pro se customer will ever be awarded any damages, despite a mountain of evidence.
Arbitration proceedings are very frustrating and time consuming. To top that, the arbitrators are not interested in dispensing justice. There is no assistance provided by FINRA either. In the customer’s experience, the arbitration proceedings point to a rot in the society. The financial regulators hire independent contractors to act fairly. However, based on the customer’s experience, you are out of luck if you are up against an extremely rude chair who enjoys putting customer’s down in favor of the brokerage firms.
There is an underlying conflict of interest that the regulators must consider. Arbitrators are paid per session; hence, more sessions mean more fees. There is no advantage to the arbitrators to decide the motions fairly and once and for all. The customer had to bring two motions to compel JP Morgan Securities to provide her account statement. Shockingly, in both motions, the arbitrators asked the aggrieved party to pay half of the session fees even though it was JP Morgan Securities who was withholding evidence against the law.
To add insult to injury, fees paid by the customers to the attorney and/or security industry expert will not be awarded as damages. In this case, the arbitrators accepted the culpability of JP Morgan securities but watered down the many securities industry’s violations.
Would you suspect that something is not right if a broker:
- Changes statements to cover up unauthorized transactions
- Transfers incomplete investment account out of JP Morgan upon customer’s request after approving complete transfer
- Blocks the customer from assessing her account online
- Approves/confirms complete cash ACH transfer out of investment account but transfers only 1/3rd off the cash.
- Withhold cost basis for the securities upon transferring the investment account out
The customer provided solid proof, but the arbitrators were not concerned about protecting the customers. The arbitrators’ order read in part…
Although the Panel finds that Respondent (JP Morgan securities, JPMS; CRD# 79), made certain errors and mistakes in the record keeping related to Claimant’s account, the Panel does not find that those errors or mistakes resulted in any legally cognizable damages to Claimant.
The arbitrators did not explain what “legally cognizable damages” mean and did not award any fees paid by the customer. Hence, JPMS got away without paying damages.
There are many FINRA cases filed against JPMS.
For more info, visit https://brokercheckinfo.com
Investor’s Account Data Housed with JP Morgan Securities was Tampered to Coverup
https://files.brokercheck.finra.org/firm/firm_79.pdf