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The bankruptcy of Lehman Brothers Holdings Inc. (NYSE: LEH), the sale of Merrill Lynch & Co. (NYSE: MER) and the strain on American International Group Inc. (NYSE: AIG) have put an unprecedented strain on the financial system. Investors looking for a way to recoup their losses are probably out of luck.If you lost money owning shares of financial services companies, odds of getting your money back are remote. To prevail in an arbitration hearing, investors need to prove fraud such as the broker bought stock without their knowledge, bought stock just to generate commissions (churn), bought it knowing that it was unsuitable, or misrepresented the risks of the investment. These claims are all difficult to prove and even if an investor is victorious, there is no guarantee they will get a full refund.
According to New York securities attorney Mark Astarita, arbitration cases take between 14 and 18 months to resolve. Investors win about 50% of the time. "Stocks go down every day," he said when we spoke earlier today. "There needs to be wrongful conduct" to win a case.
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