Despite protests, you still can't sue your broker

  @Money July 15, 2013: 10:40 AM ET
arbitration

Brokerage customers must resolve most disputes through mandatory nonjudicial arbitration.

(Money Magazine)

Got a beef with your broker? You'll have to keep waiting for your day in court.

In April, state securities regulators and members of Congress urged the SEC to end Wall Street's practice of forcing customers to resolve disputes through nonjudicial binding arbitration rather than by a lawsuit.

Riling them up was a ruling in March to let Charles Schwab extend the longtime ban on individual court actions to also forbid customers from joining class-action suits.

Critics say Schwab's move, likely to become industry practice if it stands, would unfairly shield brokerages from paying damages if they were liable for small-scale losses among a large number of customers.

Related: Sallie Krawcheck on trusting Wall Street again

While some SEC members are sympathetic, commissioner Elisse Walter said in May they won't address the issue this year, Reuters reports. In any case, protect yourself by saving records and documenting conversations with your broker, says Los Angeles securities lawyer Ryan Bakhtiari.

Verify all fees, and vet your broker carefully using brokercheck.finra.org. To top of page

Send a letter to the editor about this story to money_letters@moneymail.com.


Arbitration at a glance
Instead of going to court, brokerage customers must take most disputes before a nonjudicial panel. Some key 2012 statistics:
Investor complaints 2,586
Rulings 570
Damage awards 255
Notes: Arbitration cases may also be resolved by settlement, mediation, withdrawal, and other actions. Damage awards include non-monetary relief such as apologies or canceled trades. Source: Finra
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