US News & World Report published an article today written by Rob Silverblatt. The article was entitled “Could Arbitration Help You Recover Investment Losses.” The author interviewed several attorneys who practice in the area (unfortunately, the author of this blog was not one of them) and discussed patterns and trends in securities arbitration filings. The article also noted the fact that concerns related to the arbitration process have caused politicians to push the Arbitration Fairness Act (AFA) through Congress. The AFA would nullify mandatory arbitration provisions in contracts between investment firms (as well as other companies) and their customers.
The timing of this article is hardly coincidental. Over the past few years, consumers and investors have fallen victim to a scourge of Wall Street initiated hardship. Unlike the dotcom collapse that occurred earlier in the decade, losses have occurred across the board, including investments marketed as “conservative” or “cash equivalents.” From auction rate securities, collateralized mortgage obligations, and unprecedented losses in bond funds, investors have had few places to turn. In addition, as the stock market plunged from late 2007 to early 2009, investors who were in stocks suffered substantial losses. Those who were sold inverse and leveraged ETFs lost even more.