(Underlined italicized
text represents the latest additions to this training
guide. Underlined text represents the previous additions
to the training guide)
Modern public securities investment and
trading is a fast paced complicated process. Although
modern technologies in communications and Internet
processes facilitate the process and makes it appear easy
it is an extremely complicated and sophisticated process.
Trades are placed and executed in a complicated
environment and set of arrangements. There are many steps
along the way for human error, human discretion and
indiscretion, manipulation, greed, fraud and outright
thievery to occur. Tremendous amounts of monies are
involved and changes hands every second. The public
securities markets now involve many foreign
collaborations between the U.S. markets and other large
and small Foreign exchanges. There are a multitude of
laws and rules and regulations at every level of the
process. These laws and regulations are necessary to
protect investors rights, and provide security and some
certainty and predictability of operations within the
markets. Just as it behooves the investor to learn the
art and science of investing and watching his own money,
it is essential that investors understand as much of
these rules, regulations and processes as possible.
Understanding these processes will not only increase the
ability to resolve disputes but will many times prevent
disputable situations from occurring.
Since it may not be possible for every investor to
attain the proficiency of a securities lawyer, there are
certainly many situations where it will be advisable to
retain the services of a securities lawyer. However many
disputes can be effectively and quickly handled by a
knowledgeable investor utilizing the quick and simple
tools offered in this Dispute Resolution Center. The
Securities and Exchange Commission & the major
securities exchanges have put in place excellent dispute
resolution processes. They have established requirements
for operations of brokers and market makers. These
processes however can be easily forgotten and put aside
particularly if you are engaging the assistance of the
major middle man in the process, your broker. Brokers
carry a significant amount of the liability and
responsibility to resolve these disputes on the front
end. However their policies and employees are used as the
first line of resolution and defense in dealing with the
problems. They would obviously like such problems to go
away rather than face them. They usually attempt to get
rid of the problem by pacifying you into the belief that
they have done some type of review and everything turned
out okay. Most of the disputes investors will encounter
involves improper execution of orders to buy or sell
securities. the following list identifies some of the
major problems
1. The order to buy or sell was never
filled.
2. The order was not timely filled.
3. The order was filled at to high a price when
buying.
4. The order was filled at to low a price when
selling.
5. The records and accounting provided by the
brokerage is wrong.
6. The broker gave you wrong and misleading advice or
information.
7. The broker did not carry out your instructions as
given.
Modern securities traders will unfortunately encounter
such problems almost on a daily basis if they trade
frequently enough. It is essential therefore that the
modern trader have some quick and easy dispute resolution
procedures in his arsenal to deal with such ubiquitous
problems.
It is important to realize that there are usually two
major players in any order based transaction, the broker
who takes and transmits the order, and the market maker
which is usually an indepedent company that actually
executes the order. The broker decides which primary
market maker they use. Many times there may be more
entities involved in any particular trade order flow.
Step One
The first step to resolution of these problems is to file
a challenge by calling the brokerage and speaking to a
customer service representative or manger. this step is
very often useless but it is necessary because it is the
fastest way to resolve a problem. it sometimes resolves
the problem very quickly and allows the investor to move
forward with the main business of investing.
Unfortunately this step will not usually work unless
there is some major glaring fault on the part of the
broker or the market maker. It is important at this step
to get and record as much information as possible. Here
is where you start accumulating and organizing your
records. you should have a special record keeping file
for all documents that you come by during your trading
activities. The following information should always be
recorded and saved:
.....The names of the individuals spoken with
.....The name of the broker and his/her company
.....The name of the particular market maker and his/her
company.
.....The times and places of any important events.
.....All order and trade confirmations need to be printed
and kept.
.....Your online brokerage accounting screens listing
your trade history, account balances, positions
etc.should be viewed and printed at least once a day.
This is extremely important because these brokerage
accountings can easily be changed by the broker to
reflect their opinion of your account transactions after
the fact. The contemporaneous online accountings can
serve as important evidence and notices of situations and
irregularities in the account.
During contacts with the broker or market maker is
extremely important to be courteous and non-accusatory
during your communications, however let them know that
you will need to follow up on the inquiry if their
assistance does not produce the desired results. You will
be told by some brokerages that there is no way to
followup or file any complaint against the brokerage and
market maker on OTC:BB transactions. They do this to try
and persuade you not to go further with your inquiry
after they have looked into it. At this point you must
request the address of the Compliance Department and
advise them that you will be filing a complaint with the
compliance department at this time it is also important
to get the name of the contact or "Order Flow" person
that was used to take the order and /or the name of the
individual market maker who handled the transaction at
the market making company. Sometimes they will tell you
they do not have this information. During any
conversations with the broker it is important that you
write down anything that is said in the conversation.
Remember they record some of these conversations so keep
what you say to a minimum. Your job at this point is to
get them to seriously look into your inquiry and to
collect information from them. You should ask any
questions you need to at this point and write down their
response. Do not try to demonstrate your knowledge and
expertise, and never mention the words "lawyer or
Attorney". It is important that you have them respond to
your initial inquiry in as free and open a manner as
possible.
Step
Two
Next you must file a written complaint with the
brokerage firm. The telephone contact with the brokerage
will probably advise you to file this written request
with their customer service department or some other
department with less authority than their Compliance
department. They do this because to get you partially
into the system but not really at the big door. It is
probably advisable to do this however once they reply in
writing or by e-mail as they often do, you must then be
prepared to quickly move to step three. Some times this
step becomes the formal complaint to the Compliance
department because the brokerage will advise you that
there is nothing more they can do. Generally however you
should give the customer service depart one more chance
to resolve the situation by a written request. Sometimes
this will put them on notice of how seriously you
consider your complaint and they will do a better job at
attempting to resolve it. Again the importance of trying
to get the customer service department, or management to
resolve the situation is saving time. Many times however
they will forward such written requests to the Compliance
department.
Discovery
A most important part of this step is the written request
for discovery of important and relevant information. This
is where you make your first written request for
important information that you do not have, need, or want
to collect in case you need it later. This is a very
important request in every step of the process from this
point on. At every step ion the dispute process you must
make a list of potential questions which you need
answered. Remember information is always the key to
success and they are duty bound to provide any relevant
information about the transaction and process,
particularly when you make that request in writing. It
also advises them of how serious and efficient you are
about your inquiry and complaint.
Some of the questions you may
need information on are:
Name of all individuals in the "Order Flow"
chain (Order Flow is the term commonly used in the
industry to describe the individuals who handle the
transaction at the market maker level, or the process
that actually gets the trade executed).
All dates and times involved in the transaction,
and in the dispute process.
A description of the Broker or Market Makers
internal dispute resolution process.
Actual copies of all reports given and received by
the broker or market makers in the transaction or
containing the transaction. This includes any reports
required for the market maker to keep about the
receipt and execution of trades in an around the time
of the instant transaction.
Copies of all correspondence between broker, and
market makers, and between market makers involving the
instant transaction.
Any other relevant information which may be
helpful.
You can use the Broker/Market
Maker Inquiry & Challenge Form to file your
complaint and requests in this step.
Step
Three
Step three requires the filing of a formal complaint with
the Compliance department of the brokerage Firm. We have
attempted to list the Compliance department addresses of
the main brokerages, however it is essential that you
call the offending broker and get the current proper
address. The Compliance department is the place where
they really start to take your complaint seriously. This
is essentially as close as you will get to their legal
department before seeing them at a mediation, arbitration
or in Court. With your submission of your claim to the
Compliance department you will inform them that you are
also simultaneously taking steps required in step four of
this process. this lets the compliance department know
that the cat is already out of the bag and hopefully they
they move more quickly. remember that time is always an
issue. You want to resolve these things as quickly as
possible. unfortunately if you get to this level the
dispute will start to take more time to be resolved
because you now have more formal and legalistic processes
being invoked at the brokerage level. Remember that
legalistic processes mean more time.
You can use the Broker/Market
Maker Inquiry & Challenge Form to file your
complaint and requests in this step. Address the
Complaint to the Compliance department of the Broker or
Market Maker Company.
Step
Four
Step Four is contemporaneous with Step Three. Step
Four is the filing of formal complaints with entities
other than the brokerage. Here is where you file and
independent complaint with the compliance department of
the market maker, the national association of securities
dealers (NASD), the securities and exchange Commission
(S.E.C.), Your State securities Commission, and any other
securities exchange which may be involved with the
Transaction.
If you believe that you have been defrauded by a
broker/dealer, brokerage firm, investment advisor, or
other industry professional, you may choose to file a
customer complaint or a regulatory tip with
NASD Regulation
NASD
excerpt.......
Who should file a customer
complaint?
A "customer complaint" may be filed by a
customer, or person acting on behalf of a
customer, who feels they have been subjected
to improper business practices involving
their broker or brokerage firm.
Who should file a regulatory tip?
A "regulatory tip" may be filed by an
investor, industry member or professional who
is aware of instances of unfair practices,
fraud, or abusive conduct involving brokers
or brokerage firms.
If
you are aware of unfair practices or specific
instances of abusive conduct, NASD Regulation
wants to know about it immediately. Often,
violations of our rules and the federal
securities laws come to light through the
receipt and investigation of regulatory tips
from investors, members of the industry, and
other industry professionals.
You
have several options when filing a regulatory
tip. You can send an Internet complaint using
our Regulatory
Tips Form
(see notice below) or you can send a regulatory
tip to the NASD
Regulation District
Office
nearest you. Also, in situations where time is
of the essence or you feel that you need
immediate contact, you may call the
NASD
Regulation District
Office
nearest you.
NASD
Regulation may find it useful to contact you,
for the purposes of verifying the information
provided and soliciting additional information.
While anonymous regulatory tips will be accepted
and reviewed, their value may be diminished if
NASD Regulation is unable to conduct this
additional inquiry.
It is
requested that you provide a brief summary of
the significant types of abusive conduct and/or
rule violations that:
- you
believe to have taken place,
- you
believe may now be occurring, and/or
- you
believe may be about to occur.
It is
also asked that your summary, to the extent
possible, provides the names of the involved
parties, their roles and their relationships,
the securities associated with this matter, and
the time periods or dates applicable to these
events.
If
you are in possession of written materials or
other documentation that supports this
regulatory tip, NASD Regulation staff will ask
for this information following the receipt and
review of your regulatory tip.
All
regulatory tip information received will be
treated in confidence to the fullest extent
possible. NASD Regulation, however, cannot
guarantee that during the course of a related
investigation or possible prosecution of the
matter that the identity or documents of the
source of a regulatory tip will not become
known.
|
See also
How
the SEC Handles Your Complaint
You can use the Regulatory
Tips Form, NASD
Complaint Form, SEC
Complaint Form to file your complaints and
requests in this step. State
Securities Complaints should follow the
information in the Forms Section below.
Step
Five
Step five involves filing a request for mediation or
arbitration. The NASD Regulation information is
essential in filing and understanding these processes.
Follow these links:
NASD
Mediation
NASD
Arbitration Procedures for Investors
Step
Six
Step Six requires filing a lawsuit. Here you will need
to acquire a lawyer with expertise in the particular area
of concern.
Forms To Utilize in
the Dispute Resolution Process
Broker
Contact Form.....Use this form to record
information when you are contacting brokers or any
securities, private or public investment opportunity.
Broker/Market
Maker Inquiry & Challenge Form
....This form can be filled out online printed and
mailed into the broker, or printed blank and typed or
handwritten. It can also be used in filing the Broker
Compliance Complaint when addressed to the broker's
Compliance Department.
Broker
Compliance Complaint
Send to the Compliance Department of the specific
Brokerage Company a written document (or the
Broker/Market Maker Inquiry & Challenge Form above)
setting forth the details of the dispute, including all
relevant dates and names, in a clear, concise, and
chronological fashion and should conclude by indicating
what relief (e.g., money damages in a specific amount,
performance of a particular agreement, interest, etc.) is
requested. The claimant should attach copies of documents
and supporting materials as exhibits to the Statement of
Claim.
Market
Maker Compliance Complaint
Send to the Compliance Department of the specific
Market Maker Company a written document (or the
Broker/Market Maker Contact Form above) setting forth the
details of the dispute, including all relevant dates and
names, in a clear, concise, and chronological fashion and
should conclude by indicating what relief (e.g., money
damages in a specific amount, performance of a particular
agreement, interest, etc.) is requested. The claimant
should attach copies of documents and supporting
materials as exhibits to the Statement of Claim.
Regulatory
Tips Form
NASD
Complaint Form
SEC
Complaint Form
State
Securities Complaint.... Send to your
specific State
Securities Regulator a written document setting forth
the details of the dispute, including all relevant dates
and names, in a clear, concise, and chronological fashion
and should conclude by indicating what relief (e.g.,
money damages in a specific amount, performance of a
particular agreement, interest, etc.) is requested. The
claimant should attach copies of documents and supporting
materials as exhibits to the Statement of Claim.
Mediation
Reques Form
Arbitration
Request...... File a written Statement of Claim -
File with the Director of Arbitration a typewritten or
printed document stating the claim. This document should
set forth the details of the dispute, including all
relevant dates and names, in a clear, concise, and
chronological fashion and should conclude by indicating
what relief (e.g., money damages in a specific amount,
performance of a particular agreement, interest, etc.) is
requested. The claimant should attach copies of documents
and supporting materials as exhibits to the Statement of
Claim. The claimant should provide sufficient copies for
each party, the arbitrators, and the self-regulatory
organization.
For SEC answers to some specific questions to dealing
with disputes click the following:
Questions?
Complaints? Search Key Topics for Fast
Answers
Other Important
Dispute Resolution Information
The
Stock Detective .....A good general site on stock
scams
Stock
Fraud Samples ....Study these cases of SEC documented
violations to understand & avoid scams
An
Inside Look at Broker Arbitration
An
Inside Look at Securities Class Action Litigation
How
U.S. Laws Can Help Non-U.S. Investors
For Further details of the Hannaian
Business network and its associated business opportunities
visit the Business Opportunities Section of the Hannaian
Publishing Website at
http://www.hannaian.com/distribr.htm
|