Securities Arbitration Lawyer v. a Non-Attorney Representative?

If you’ve been investing for even a short while, you may have been contacted by someone claiming that you were “cheated” out of money or otherwise wronged by your broker. This company can help you get your money back that you are rightfully entitled to, they say.

Non-attorney representatives have been the subject of numerous recent news stories about how they fail to adequately represent investors in arbitration.

If you were to work with a law firm like Silver Law Group, you would be entering into a payment agreement commonly known as a “contingency fee arrangement.”  In other words, your legal fee would be contingent on representing you, and winning your case. You would generally have no out-of-pocket expenses.  A percentage of your settlement would be the fee you pay for the work on your case.

According to recent articles, non-Attorney Representative companies, or NARs, work a little differently. Instead of collecting money if or when they win your case, they require you to pay a fee up front, sometimes a substantial one, regardless of any monies they may be able to collect. And that’s where the problems can start. Many NARs have been known to take a desperate investor’s fees and never return—making you a victim for the second time.

NAR’s work the other way around than lawyers—instead of you looking for them, they generally find you first. Out of the blue, you’ll get a phone call one day from someone you don’t know informing you that your broker has “cheated” you out of your investment. Helpfully, the nice voice on the phone says they can recover the money you lost for you.

According to a reported story, calling themselves a “stock loss recovery consulting firm,” or a similarly confusing title, these recovery companies seek out investors who may—or may not—have lost money due to stockbroker misconduct. They find and prospect for clients with information pulled from investor lists and court filings. Employees in their boiler rooms are cold-calling people just like you, every day, about “stock loss recovery,” hoping to sign someone up. You may even get that phone call even though you haven’t had a problem with your broker’s investment advice.

These fast-talking callers make amazing promises of getting back your money and more, all for an up-front fee, which can be as much as $5,000 to $10,000 for a “case analysis,” and 50% of any monies recovered. Unfortunately, many of these companies aren’t legitimate, and you have a high chance of losing even more money to a fraudster. This is particularly true for people living outside the US.

Some companies will require you to wire them money, which you should never do—once it’s gone, there’s no way to get it back.

Understand that NARs are neither lawyers nor law firms, although in some cases, they may imply that they are. They may indicate that they can provide “legal assistance” to recover monies from investments gone wrong.  In many cases, these firms are staffed with individuals who are former brokers and other financial services representatives who have either left the industry, left brokerages who were expelled by FINRA or who were barred by FINRA from working in the industry.

In some states, NARs may come under the “unlicensed” or “unauthorized practice of law,” a.k.a., practicing law without a license. Additionally, if you recover anything, it may be a small percentage of the loss an experienced attorney can recover for you. Working with an NAR also means you won’t have the usual protections of working with an attorney, who is licensed by the state. Attorneys are required to abide by rules of professional conduct. NARs aren’t regulated by the state or in any way supervised, so there is little or no protection for an investor.

One particular company that has brought the issue to light is called Cold Spring Advisory Group, based in New York. Owned by Michelle Ottimo and run by a number of “consultants,” including her husband Louis, a former broker (CRD #2606438), Cold Spring has been the subject of multiple complaints regarding their business practices and acquisition of client lists. Cold Spring also represents investors in FINRA dispute arbitration, and has allowed non-attorneys to represent clients in these hearings. Since some states have restrictions on who can represent parties in legal matters, a few claims have been outright dismissed on that alone.

In 2017, the Public Investors Arbitration Bar Association (PIABA) released a report about NARs and the issues that investors may have with choosing them over an attorney. (Cold Spring is mentioned in this report, as well as a few other NARs.)  The SEC has additional information on its website about these companies, as does FINRA. If you’re considering legal action against a broker, investment advisor or other financial services professional, research is essential before hiring anyone to represent you in a hearing or in court.

Contacted By An Asset Recovery Firm?

There’s no substitute for real legal assistance from a qualified attorney who understands the financial industry and knows how to help you. Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today and let us know how we can help.