April 3, 2009
I am an attorney in Salt Lake City. My firm, Graham Law Offices, is exclusively engaged in representing claimants against financial advisors and brokers. We have filed over 200 cases with FINRA since 2004, when I began doing this work. I served as Utah Attorney General from 1993-2001.
I strongly support the letter submitted by PIABA. It reflects a great deal of meticulous review and thought based on the actual experiences of Claimants trying to make their way through the FINRA case process.
My comment is addressed to the heart of why FINRA exists. This rule change adds to the burden and intimidation claimants must face in order to file a claim with FINRA. Therefore it is critical to understand how many barriers already exist to hinder a claimant from filing a FINRA claim.
First, when a customer suffers a loss caused by broker misconduct, the first thing that customer does is talk to the broker about it. The brokers uniformly respond that the losses are the fault of the market "and there is nothing you can do about it." To the customer, that means there is no remedy. This strategy deters and discourages 90% of the claims at that stage. Few customers have the courage or knowledge to proceed further. I have a case now where the client, a 71 year old retiree, was lectured by his Smith Barney broker: "Do you think you can win a law suit against us? We have never lost a legal battle with a customer." That wasn't true, of course, but the client thought it was. Out of sheer desperation, he kept looking until he found our firm.
Second, there is the barrier of cost. By definition, claimants have lost a significant amount of their resources. Many are retired on fixed incomes. They cannot afford to pay huge attorneys fees or endure other expense burdens. They literally do not know where to turn. When they are fortunate enough to find a firm who will handle their claim on a contingent fee basis, they learn, usually for the first time, that they cannot file their claim in court, but must file with an organization called FINRA, an organization most of them have never heard of.
The third barrier is that claimants are fearful about FINRA as a forum. They understand that the brokers are members of FINRA and very knowledgeable about how it works. As counsel for claimants, it is our job to advise and assure them that this forum is a fair and "user friendly" forum. The key point in that discussion is when we must go through the list of all the documents they must produce in order to file a claim. Many of the documents on the Customer list have no relevance to the claim at all. Many are invasive of privacy. I advise Claimants that producing these records is something they must endure to get in the door at FINRA. The idea that FINRA is now going to add to the burden including even loan and credit card applications is nothing short of harassment. These documents add nothing to the evaluation of the claim. The purpose is to embarrass and burden the Claimant. If that results, then this third barrier to filing a claim becomes larger indeed.
I sincerely hope the direction of FINRA will, in the future, take the path of reducing the barriers which keep Claimants away from FINRA, not increase them.
Thank you for your consideration.
Jan Graham
Graham Law Offices
Salt Lake City, Utah