Most individuals believe that United States securities laws are the strongest in the world in terms of investor protection. The Securities and Exchange Commission is viewed as a tough watchdog. More important for investors, meaningful remedies are available against brokers through arbitration and against publicly traded companies through securities litigation.

So how does any of this help if you are a non-U.S. resident? Many individuals worldwide do not realize that they can take advantage of U.S. securities laws in certain circumstances. This is not to suggest that if you live abroad you should ignore remedies within your home country or elsewhere to get your money back. But can U.S. laws assist you? Absolutely.

In June 2000, for example, U.S. District Judge Victor Marrero awarded a Canadian client $52.5 million in interest in addition to a $111.5 million jury award against Bear Stearns. The client had lost more than $300 million in futures contracts. The jury found Bear Stearns negligent because the brokerage firm allowed a client to invest millions in foreign currency futures contracts without advising him of the risk involved.

Before considering your possible remedies, you need to determine whether your complaint is against a broker-dealer or a company. In other words, do you believe you lost money because a broker engaged in actions that caused you to lose money, such as placing you in unsuitable investments, excessively trading your account, or making transactions that you did not authorize? Or do you believe that you lost money because a company defrauded you and other investors by making you pay too much for its shares?

Actions Against U.S. Broker-Dealers

If you lost money because of the action of a U.S. broker-dealer or subsidiary, then you may be able to bring an arbitration or lawsuit against it. You should review your customer account agreement, which may specify that any dispute with the broker will be subject to arbitration. If so, this is probably your sole option and you will not be able to access U.S. courts.

If you are not familiar with the securities arbitration process, you may believe that your right to arbitrate a claim is not very beneficial. But the results in the U.S. prove otherwise. Thousands of U.S. investors file arbitration claims every year and investors receive tens of millions of dollars in awards and settlements. Non-U.S. citizens file comparatively few arbitrations, perhaps because they are not aware of the availability and effectiveness of the arbitration process.

Do not be intimidated by the arbitration process if you are a non-U.S. citizen investing in U.S. markets. You may not even have to travel to the U.S. Arbitrations generally are held in several major cities around the world, and NASD and NYSE arbitration forums for investors conduct hearings outside the U.S.

Arbitrations involving non-U.S. residents are relatively rare and, surprisingly, have not increased in recent years. Few results involving non-U.S. residents have been published, but it appears that arbitration awards for non-U.S. residents have been comparable to those for U.S. citizens. So, if you believe you have a strong claim against a broker, you may wish to consider pursuing an arbitration.

Institutional investors also may file an arbitration. Foreign institutions have successfully brought arbitrations against U.S. broker-dealers. These claims generally involved the sale of very complicated financial instruments to institutions that did not understand the risks.

Non-U.S. residents investing with a U.S. commodities broker may pursue such a claim in commodities arbitration forums run by the National Futures Association. Can you win in this forum? Absolutely - in 1997, for example, NFA issued an award in excess of $12 million.

But what if your account agreement does not include an arbitration provision? Are you out of luck? No, you may actually find yourself in a stronger position. You may have two options: filing an arbitration against the broker-dealer or filing a lawsuit against the broker-dealer. Your best option depends upon the facts and circumstances of your case. If the claim is comparatively modest, you will generally prefer arbitration proceedings. But if the claim is very large and you are not bound to arbitration, you may desire action in the U.S. courts through a lawsuit.

If you take action, the U.S. broker may well attempt to keep the action out of U.S. courts or U.S. arbitration proceedings. But if there is a strong connection with U.S. securities markets, then you are likely to successfully keep the matter in the U.S.

Actions Against U.S. Companies

If you purchased shares of a U.S. company and you believe the company defrauded you and other shareholders, then you can take appropriate. You do not need to be a U.S. shareholder to take action against a U.S. company.

Because it is difficult for any single individual to bring an action against a company, U.S. laws permit class action lawsuits to be brought against companies. Such litigation permits an investor to bring an action against the company on behalf of all investors who purchased the stock of the company when the company defrauded the entire market concerning the value of its shares - this is the so-called "class period."

If you believe you have a potential class action case against a company, then you can contact a securities class action law firm. These firms bear the cost and risk of such litigation. If the case is successful, legal fees are approved by the court.

A securities class action lawsuit is a very powerful weapon for investors. Securities class action cases in the U.S. are effective, and hundreds of thousands of investors have recovered billions of dollars as a result of such actions. A recent class action settlement against one company, Cendant Corporation, resulted in affected investors recovering more than $3 billion.

As a non-U.S. resident investing in U.S. markets, three facts about securities class action litigation should be highlighted.

First, U.S. companies are bound by relatively strict financial reporting requirements. U.S. law requires accurate earnings reports because investors make investment decisions based on these quarterly and annual announcements. Unlike some other countries, "financial irregularities" are treated very seriously in the U.S. Specifically, if a company is forced to restate its financial results for prior periods, then it may be liable to investors who purchased stock at artificially high prices during this period. Compelling class action cases generally may be brought when a company announces that it must restate its earnings for prior periods.

Second, U.S. rules for securities litigation are different than in many countries. In many other countries, affected investors are forced to bear the cost of such litigation. In the U.S., however, the cost and risk of securities class action cases are borne by the law firms that prosecute the case. If the case is successful, any cost recovery and fees that attorneys receive are approved and awarded by the court. Also, the so-called "English rule," where the loser of a lawsuit bears the legal costs of the winner, does not apply in the United States.

Finally, under U.S. securities laws you do not have to participate in a class action lawsuit to be entitled a recovery if the lawsuit is successful. But as a non-U.S. resident, you may want to participate in the class action to ensure that you receive your portion of the eventual settlement. If you join an existing lawsuit, you will not need to worry whether you will be contacted and receive the proper paperwork if the case settles several years hence.