How to Get Revenge on Wall Street

Let's say you're a Citigroup(C Quote - Cramer on C - Stock Picks) brokerage customer, and two years ago, at the urging of your broker, you bought a bunch of WorldCom shares. Your broker iced the deal by bragging about how the firm's hotshot telecom analyst, Jack Grubman, kept predicting the stock was going to the moon.

Two years later, your investment in WorldCom is practically worthless, as the telecom giant struggles to emerge from bankruptcy. Grubman, meanwhile, has been drummed out of the securities business -- exposed as being nothing more than a Wall Street version of a snake-oil salesman.

It's a situation that describes the predicament facing many investors who got burned buying stocks based on Wall Street hype, whether they got hit by Grubman's questionable turnabout on AT&T(T Quote - Cramer on T - Stock Picks) or one of the more outlandish buy recommendations on Qualcomm(QCOM Quote - Cramer on QCOM - Stock Picks), Amazon(AMZN Quote - Cramer on AMZN - Stock Picks) or JDS Uniphase(JDSU Quote - Cramer on JDSU - Stock Picks).

So what's the best way for investors to exact a measure of revenge against Wall Street? Should you file an arbitration claim against an analyst and his brokerage firm, or join one of the dozens of class-action lawsuits that have been filed in the aftermath of last year's investigation into tainted stock research?

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Is Class Action Right for You?

There's no right or wrong answer to choosing a legal strategy. A lot will depend on the extent of your losses, the strength of your claim and the amount of time you're willing to devote to pursuing the matter. Joining a class-action suit probably makes the most sense if your losses are small, you rarely read an analyst's report from cover to cover and you don't have the time or patience to work closely with an attorney.

Unlike an arbitration, a class-action requires little work on the part of an investor. Trial lawyers do all the heavy lifting in a class-action and foot all the expenses that are associated with bringing the case. Basically all an investor needs to do is agree to be a part of the "class" of litigants and await the outcome.

Of course, you often get what you pay for with class-action litigation.