Investors' Arbitration Awards Hit Record $194 Million in 2004
Dow Jones Newswires</br></br>Investors won a record $194 million in arbitration against their brokerage firms in 2004, up 20% from 2003, according to statistics released this week by the National Association of Securities Dealers.</br></br>The money awarded, which includes $22 million in punitive damages, beats the previous total record of $163 million set in 1998. But because the number of cases closed in 2004 also reached a record high of 9,209, the actual rate of investor wins remained relatively unchanged, at 55% versus 54% in 2003.</br></br>Investors who say they've been wronged by brokers must submit their complaints to arbitration. The NASD operates the securities industry's largest dispute-resolution forum, in which panels of arbitrators determine whether investors are owed restitution from their brokerage firms.</br></br>While the number of cases closed in 2004 rose 27% from 2003, the number of new cases filed declined 8% to 8,201. The decline in new cases didn't come as much of a surprise to NASD staff, who are used to seeing the caseload ebb and flow depending on how the overall stock market fared in the previous year. Following a recovering market in 2003, fewer cases were expected for 2004, says NASD Dispute Resolution President Linda Fienberg.