Not every investment loss is someone’s fault. Markets decline, sectors fall out of favor, and even well-chosen investments underperform. But when losses result from advisor misconduct — unsuitable recommendations, excessive trading, fraud, or negligence — you may have a path to recovery.
You Lost Money — Now What?
This guide covers your options, from the simplest to the most aggressive, so you can choose the approach that fits your situation.
Step 1: Determine Whether Your Loss Was Misconduct or Market Risk
Ask yourself these questions:
- Did my advisor recommend investments that did not match my risk tolerance?
- Were there excessive trades in my account that generated high commissions?
- Did my advisor fail to disclose material risks or conflicts of interest?
- Was I pressured into investments I did not understand?
If you answered yes to any of these, your losses may stem from misconduct — not market risk. Review our guide on red flags your advisor may be mismanaging your money for a detailed checklist.
Step 2: Document Everything
Before you take action, build your case. Collect:
- Account statements showing the losses and trading activity
- Emails and written communications with your advisor
- Marketing materials, presentations, or pitch documents
- Your investment policy statement or risk profile questionnaire
- Trade confirmations — especially for trades you did not authorize
Organize these by date. The clearer your documentation, the stronger your case.
Step 3: Understand FINRA Arbitration
Most investor disputes are resolved through FINRA arbitration. This is not optional — your account agreement almost certainly contains a mandatory arbitration clause that requires it.
Key facts about FINRA arbitration:
- It is binding — the award is final and enforceable in court
- It is faster than litigation — most cases resolve in 12-18 months
- It is less formal — discovery is limited and rules are simpler
- You can represent yourself, but most claimants use an attorney for significant losses
- The statute of limitations is typically 6 years from the violation
Step 4: Consider Mediation First
FINRA offers a mediation program that is voluntary, confidential, and often faster than arbitration. A neutral mediator helps both sides reach a settlement. Mediation succeeds in about 70% of cases that attempt it.
The advantage: you retain control over the outcome. In arbitration, the panel decides. In mediation, you only settle if the terms are acceptable.
Step 5: When to Hire a Securities Attorney
For losses under $50,000, you can represent yourself in FINRA arbitration. For larger amounts, legal representation typically produces better outcomes — often two to three times higher awards compared to self-representation.
Securities attorneys usually work on contingency, meaning they only get paid if you recover. This makes legal representation accessible regardless of your current financial situation.
Haselkorn and Thibaut has recovered losses for investors for over 50 years. Call 1-888-885-7162 for a free consultation.
What Happens After You File a Claim
After you file, the respondent (your advisor and their firm) has 45 days to respond. The case then enters discovery, where both sides exchange documents and take testimony. A hearing is scheduled, and a panel of one or three arbitrators renders a decision.
Most cases settle before the hearing. Firms often prefer settlement to avoid the public record of an adverse arbitration award.
The Clock Is Ticking
FINRA arbitration has a six-year eligibility period from the date of the violation. After that, your claim may be time-barred regardless of its merits. Do not wait to investigate your options.
Start with a FINRA complaint and a free attorney consultation. Both cost nothing and give you the information you need to make a decision.
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