An Auction Rate Securities (ARS) David vs. Goliath story

Some very useful comments on the ARPS mess. However, while legal remedies may pan out over time, very little will get done in the near term unless Congress---our representatives ---are involved. So urge everyone to contact their senators/congressmen/women and tell them "we're mad as hell and aren't going to take it anymore! BTW, i'm out $500K thanks to the crooks at Merrill Lynch.

Joe, my heart really goes out to you. I feel truly sorry that this happened to you. (I was put into these ARS by the investment bank, UBS). Have you see the web-site which pulls together conversations between "ARS Victims"? If not, it might be helpful for you. Here's the link:

http://www.nothingcontroversial.com/forum/forumdisplay.php?f=25

Joe:

Hang tough my friend. God will see you through this.

Keep the pressure on them.

testing

There are a lot of questions here - I will do my best to respond.

First as for the statistical "study" I suggest the poster re-review his analysis because I just did a quick brief review of what was referred to and saw nothing like what was stated. Either one is mis-reading the awards or did not examine them carefully. For example before you even
get into what was in such awards and the numerous dismissals I saw, you fail to state that many of those 33 awards were what we call "industry awards" (broker vs. Bkg, Bkg
vs. broker, or Bkg vs. Bkg all of which come up in the FINRA arbitration awards as well and have nothing to do with an investor filing a claim) . I also noted one or two of those awards where the
firm apparently was the Claimant and went after the customer, yet you include all of the 33 in your "stats". Further a brief review of the actual awards simply does not demonstrate what you are saying - so at best you must be focusing on some other part of the awards rather than the actual "award". It is not easy to read these awards so I don't blame you.

I tell you what, I have one suggestion for you if you think your atty is correct - go to the attorney who supposedly said atty fees are a slam dunk or something to that effect and tell him that you want your retainer to read that his compensation will be solely based on that slam dunk atty fee award made by the arbitrators which he claims will
not be an issue - take note of his response and come back. If he says yes I suggest you have retained someone who knows nothing about FINRA arbitration (but at least you can say you got yourself a good "deal" in not paying a lawyer for a case you will lose and wasted a lot of time, filing fees etc). However, I don't think you will get to that stage because I have no doubt that he will say no thank you, and that should speak volumes about what I am saying and how your "statistics"
are completely off. If you want real stats: Here are some actual stats from the horse's mouth (FINRA) that will save you time in what you are doing:

http://www.finra.org/ArbitrationMediation/FINRADisputeResolution/Statistics/index.htm

These are overall stats for every arb filed at FINRA you will note that of all those that went to hearing only 37% in 2007 won even a dime - the rest rec'd Zero, forget about the amount of damages, let
alone atty fees, interest, or punitive damages etc. (all of which are in fact rare, other than possibly the interest part in my experience if properly sought - and I am referring to retroactive interest not simply interest from the date of the panel's award until paid" which based on years can be very large) which leads to the other poster's inquiry who is not fond of arbitration as a forum - for the most part I agree - if you go it alone or with an atty who does not know his way around the forum or if he is a tort lawyer who thinks this is the same as a Vioxx case in Court or even if he does know the forum he is not very good in what he does in the forum, you are in for a rude awakening at the end which is why win stats, among other things, are
important in choosing an atty - it also impacts upon the other side and how they view settlement which you will note at the same time about 60% of the cases filed in fact settled (confidentially).

As for the rare occasion when atty fees are in fact awarded in arbitration one must understand more often than not attorneys in arbitration are typically retained on some sort of contingency basis, although for some obvious reasons with ARS cases there are difficulties in doing that). As such, the amount of the actual atty fees under such basis is
usually going to be a percentage of the underlying award unless the arbs decide not to award atty fees on such a basis and rather do it on a different basis than the actual atty fees charged which they can do. In any event, if they do award fees based on the contingency and the underlying award
is large then so would be the atty fees awarded.

Frankly not to get off topic, but I had one arbitrator on a recent case who I was trying to remove who besides other significant issues had a long history of bad awards against claimants - in his defense while granting my motion that he recuse himself, among other things he touted one of his prior awards where his panel awarded one single dollar for the Claimant and over one million dollars for the Claimant's attorney in hourly attorney's fees, explaining in the award that the was large supervisory failures but it did not result in the damages sought. (fortunately that is not a typical Finra award) He actually thought such award demonstrated that he was somehow a fair arbitrator for Claimants and his past history included having been a senior atty in enforcement at the NYSE. In any event he was gone and the case settled soon after.

Back on topic - with regard to these ARS cases, if by chance after consideration one chooses to sell in the secondary market after possibly placing the bkg firm on notice through your counsel giving them the opportunity to buy (and that is a personal choice with various financial planning considerations to consider as well as possible
legal factors to consider in so doing) in theory, assuming a strong case I think most attys including my firm, would consider then pursuing the loss resulting from that sale, by filing an arbitration claim on a contingency basis (% of the loss) possibly along with case expenses paid for in advance by the client, depending upon the amount of damages that is then at issue. However, the losses would need to be significant enough for the atty to pursue the matter on a contingency
basis balancing the strengths and weaknesses of a particular case (and unlike what others believe, every case is different, even with this
particular issue).

As for the poster who raised the issue of Florida statutes - actually the Florida's atty fee statute (allowing the court to set the atty fee if the arbs find liability on that statute) is somewhat unique in the country, rather than being typical and by the way as stated before some states - like New York, do not permit people to sue based on the
state securities statute - only the attorney general can do so. Further with regard to Florida your focus on attorneys fees being mandatory under the Florida statute is not the end of the story - it
is first up to the arbitrators to determine if they specifically find liability under that statute - they must specifically find liability under that statute and they often do not, even if the may find liability under another cause of action fraud, breach of contract etc. That is why you are incorrect, although I grant you in my personal opinion I believe the Florida statue which mandates atty
fees if there is liability on that statute certainly helps push and focus arbitrators in that direction.

If handled correctly, with proper arbitrator screening and attention to every stage of the process, the FINRA arbitration system can work
to one's benefit, but as stated before it is a mine field. As that saying goes it not something to try at home on your own, despite FINRA's public statements that people can supposedly pursue a case on their own without experienced arb counsel; while technically true it would be truly foolish - just like their advice as to the supposed
alternatives investors have in this ARS situation - see: http://www.smeissner.com/auction_rate_securities_FINRA_release.html

(Everything but suggesting the filing of a claim in their own arbitration system against the bkg firm !).

Again, as I stated before this post is not intended as legal advice and should not be taken as such. Such advice can only be given after a careful review of each person's facts and circumstances and proper retention.

I also apologize for not using each individual screen name in replying.

Regards,

Joe: I read your post. I have two small children as well. I do feel for you and I wish to help.

If you want, call me next week. Let me get some more info to verify and I will consider taking your case pro-bono (will not charge you any legal fee, you just pay the arbitration expenses).


In the process, if you wish, we will let the world know what MSDW did to you and I think it will also help many others here in the process.

Regards,
Stuart