FINRA Arbitration Awards Risk Going Unpaid in the Face of Closing Brokerage Firms

Scott L. Silver, Managing partner of Silver Law Group was recently sourced in an InvestmentNews article discussing the issue of unpaid FINRA arbitration awards for brokerage firms that are going out of business.

According to the InvesmentNews report, FINRA reported that the number of brokerage firms open for business today is 13 percent less than were opened in 2011.  These closing firms are obviously not the one making big dollars for their customers or else they’d still be in business, and that poses a problem for many aggrieved investors seeking retribution for securities misconduct and fraud.

Sometimes, the FINRA arbitration awards simply go unpaid.

A recent case Silver has taken in the past year involving Newport Coast Securities, Inc. (CRD# 16944) is a picturesque case of the issue.

Silver had a case on behalf of a client against Newport Coast, and Newport Coast was clearly making no effort to litigate the case – a strong indicator a firm is getting ready to close its doors.

On July 28, 2016, though, InvestmentNews published another report stating that Newport Coast was selling part of its book of business to another brokerage firm, Westpark Capital, Inc. (CRD# 39914), leaving aggrieved investors out to dry  while the principals and owners of Newport Coast collect as much money as possible before jumping ship.

“How can you sell the firm’s assets for cash when investors still have outstanding arbitration claims against it?” asked Silver. “FINRA has to approve mergers, such as Newport Coast’s, so why isn’t FINRA questioning the purchase price and how those funds will be used to satisfy the liabilities of Newport Coast.”

Silver went through great lengths on behalf of the client, eventually getting Newport Coast to get involved with case.  According to InvestmentNews, Joseph Mangiapane, one of the minority owners of Rubicon Financial Inc., the parent of Newport Coast, said insurance would cover any remaining claims.

Silver and his firm continue to litigate claims like this on behalf of many aggrieved investors to try and recover their losses.

FINRA arbitration is a fast, efficient way to recover your lost investment funds due to unauthorized trading.  We work on a contingency fee basis, meaning you pay us nothing unless we win and recover money for you.

Silver Law Group represents the interests of investors who have been the victims of investment fraud.  If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.