Securities Litigation

Securities litigation deals with matters and disputes relating to securities, a generic term used to describe a wide variety of instruments that include shares of stock, bonds, notes, options, mutual funds, and debentures. Both federal and state laws regulate securities and securities litigations. Federal securities laws are generally administrated by the Securities and Exchange Commission (SEC) which was established by the Securities Exchange Act of 1934.

In addition to federal laws, there are also state laws that govern securities litigation. These laws are commonly known as Blue Sky Laws. These laws give the investors who lose money or are defrauded in the securities markets additional protections than those that are available under the federal laws.

With complaints against brokers increasing as a result of Wall Street scandals, investors should be aware of some of the basic facts concerning securities litigation.

● Securities Litigation involves attorneys who are well versed in both state and federal securities laws. Most typically, they represent investors who have incurred losses due to the unethical and/or illegal conduct perpetrated by a stockbroker or his employer.

● Securities Litigation is most often initiated against a stockbroker or his firm when investors suffer losses arising from a broker’s excessive, unauthorized or unsuitable trading. Other causes include corporate misconduct, internet fraud, selling away, insider trading, boiler room scams, mutual fund fraud and the firm’s failure to supervise.

● The most common method of securities litigation is arbitration. Arbitration is a legal process which is less expensive, time-consuming, and formal in nature than court litigation. Customers of brokerage firms are obligated to file complaints through arbitration as a result of a pre-dispute arbitration agreement. As a result, the vast majority of securities litigations are heard in arbitration rather than in a court.


● Most often, stock brokerage firms will provide for arbitration in accordance with the rules of the Financial Industry Regulatory Authority (FINRA) or the American Arbitration Association (AAA).

● Securities arbitration is intended to be a fair and efficient method of dispute resolution by impartial persons who possess special knowledge of the securities industry.

● In securities arbitration, there is no requirement that a lawyer represent a party. However, most brokers and brokerage firms have a team of seasoned securities lawyers who work hard to defend them. The Claimant, or the customer in such cases, will find themselves in a severe disadvantage if they do not have a securities lawyer representing them. So, it is advisable to consult a securities attorney before filing a complaint for arbitration.


Most states have attorneys who specialize in securities law, and in particular, the rights of investors who have been victims of securities fraud. An investor who believes that he or she has been such a victim can find a competent securities attorney by contacting the Public Investors Arbitration Bar Association (PIABA) or his/her state bar association.
Shaun Mathew is the author of this articles and writes articles for his own sites. For further details about Securities lawyer and broker fraud please visit the website.