If you are able to get an award or judgment, you still have to collect it. Whether you can do so depends primarily on whether at least one of the parties against whom your judgment or award runs can be found and that has an viable business or other assets that can be found. There's an old saying in law that there's no point in suing a turnip because, as we all know, "you can't get blood out of a turnip." This is why, before you bring your claim, you should consider whether any of the defendants will be able to pay any award or judgment.

Collecting is made easier by the fact that, in many cases, several parties may be responsible for a broker's misconduct besides the broker himself. For example, more than one broker may have participated in the wrongdoing. The broker's supervisor may also be responsible on a controlling person or negligent supervision theory. The broker's firm is almost always responsible on a respondeat superior theory, as well as under controlling person principles. Certain officers, directors, and shareholders may also be responsible under common law principles, federal controlling person liability, or state statutory rules of vicarious liability applying to securities fraud. Even where a firm is insolvent, it sometimes has insurance that will pay a judgment or award.

In addition, if you get an award in an arbitration before the National Association of Securities Dealers, the collection of your award is usually very simple. The rules of FINRA (formerly NASD) require that arbitration awards be paid promptly, on pain of disciplinary proceedings against the broker. Therefore, if you have a FINRA arbitration award against an individual broker or a firm that wants to continue to be in the securities business, they almost invariably pay. In addition, if you do business with an established and reputable securities firm, you will probably have no trouble collecting an award or judgment. In other situations, it is important to make sure that you include everyone with liability in your claim in order to improve your chances.

DISCLAIMER: Vincent DiCarlo, who authored and maintained this site, has entered government service and, as of September 1, 2008, is no longer engaged in the private practice of law.  Therefore, this site is no longer being maintained,  may not be accurate, and should not be relied upon.  It is not now and was not ever intended as legal advice.  It is being provided for historical purposes, and for the benefit of those lawyers who are capable of independently verifying the information and judging the opinions in it, and then reaching their own conclusions.  You are strongly advised to consult qualified legal counsel before adopting any of the ideas or suggestions in this material, which may or may not be applicable in your jurisdiction or to your specific situation, and may no longer be accurate or prudent in any case.  The opinions and statements at this site were solely those of the author.  They were not and are not those of, nor were they nor are they made on behalf of, any agency of government or anyone else.

Copyright © 1998-2008 Vincent DiCarlo