What are the most common reasons customer claims are denied in arbitration?
Although investors often win cases when they are properly presented to arbitrators, the following are the most usual reasons why some investors’ claims are denied:
(1) failure to file the claim within the applicable time period (the "statute of limitations");
(2) failure to properly pursue your claim according to the arbitration requirements;
(3) failure to make your claim promptly, although within the statute of limitations, in certain circumstances. (For example, if there is an unauthorized purchase in your account of stock X at $10 per share, and the stock appears on your statement for many months at that or a higher price range, and you did nothing about it, you’ll likely not be awarded your losses after the stock falls to $2 per share);
(4) the brokerage firm sent you information regarding the activity you complained of, but either you did not bother to read the material or you did not object or act quickly enough to complain about the activity;
(5) agreeing to, or ratifying, an otherwise unauthorized transaction or other conduct; or
(6) the claim is unrelated to the broker’s conduct.
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