Released: June 17, 2007

Beef with broker? You’re likely to lose

Source: Michelle Singletary, Washington Post (Free Registration)

If you have a beef with your broker and you go to arbitration, you’ll be less likely to win. And if you do come out a victor, the amount you recover won’t be nearly as much as you wanted, according to an analysis of about 14,000 New York Stock Exchange and NASD arbitration cases.

Investors working with a broker or brokerage firm are often required to sign an agreement that if a dispute arises, they have to take their case to arbitration. In such a case, the broker or firm must use an arbitration process set up and run by industry regulators.

In examining this process, the authors of the analysis looked at a period from 1995 to 2004. They found that the win rate for investors in securities arbitration cases dropped to 44 percent in 2004 from a high of 59 percent in 1999.

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