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Arbitration Awards Found Arbitrary


          A recent study reported that while investors win somewhere between 40% to 60% of customer cases, larger claims against the largest brokerage firms like Merrill Lynch and Morgan Stanley Smith Barney result in recoveries that are a small percentage of the amount claimed.

          The 10 year study was compiled by attorney Daniel Solin and Professor Edward S. O'Neal, formerly assistant professor of finance at Wake Forest University Babcock Graduate School of Management.  They analyzed every customer versus broker arbitration that had been brought before either the New York Stock Exchange or the NASD for 10 years.

          Solin and O’Neill also found that investors who take on the largest brokerages for larger claims recover just 10 to 12% of the amounts they ask for.

          A spokesman for one of the larger firms pointed out that FINRA statistics show that more than 80% of claims are settled, withdrawn, or dismissed prior to the final hearing.  The spokesman claimed that firms seek to resolve those claims that have merit before an arbitration hearing is held or an award is issued.  The spokesman claimed it is often the weaker cases that go to the award.  The spokesman for Morgan Stanley claimed that many larger claims arise from Claimants who allege damages far in access of their actual losses.  Therefore, they claimed it is not surprising that panels often do not award the full amount of large arbor punctuation claims.

Having represented many Claimants in the arbitration process over the past 30 years, I am able to assure you that the arbitration process is one that is tension-filled and privacy invasive. It is only serious people and serious lawyers that go through the process.Therefore, the only confident conclusion that one can draw from these studies is that arbitration awards are indeed arbitrary.

For more information, contact Attorney Howard Rosenfield
at 860-677-4334 or email

Attorney Rosenfield is also available to speak on specific subject matter topics related to investment fraud.