LA QUINTA, Calif. (TheStreet) -- You may think you have an open-and-shut case against a stockbroker who's a 10 on the sleaze scale. But the arbitrators who hear cases against Wall Street's rogues say even investors with good cases can lose when they're not prepared for their hearings.
A panel of four arbitrators spoke Thursday at the annual meeting of the Public Investors Arbitration Bar Association, a group of lawyers who represent investors who've been fleeced. They shared ideas about what works and what doesn't when investors look to be made whole after investment losses.
Every investor has to agree to use arbitration run by the Financial Industry Regulatory Authority, rather than court, before he or she can open a brokerage account, so it's worth knowing what arbitrators want, and what turns them off.
Some things the aggrieved investor should keep in mind:
- You'd better read your own claim. A couple of times. David E. Robbins, an arbitrator and securities lawyer at Kaufmann Gildin & Robbins LLP in New York, said it doesn't sit well when the customer says he either hasn't read the claim or doesn't remember information that's in the claim.
- Read Finra's discovery guide. This is the otherwise mind-numbing document that explains which documents each side in a dispute has the right to get from the other. It's likely you'll have to produce personal financial documents including tax returns, so make sure you can stomach the privacy invasions before you move forward. "If a client doesn't want to produce tax returns, my view is I don't want to represent them," said St. Louis lawyer and arbitrator Stuart R. Berkowitz.
- Try not to sound stupid. Arbitrator James D. Yellen of Yellen Arbitration and Mediation Services in New York said "the dumb client who gets tripped up by a cross-examination" is less sympathetic than the smart client who handles questions smoothly.
- Arbitrators aren't always impressed by the "I just trusted my broker and did what he said" explanation. The customer who tells arbitrators about their efforts to understand a product on their own "resonates with the arbitrators," Robbins said.
- Tell the truth, said Brian N. Smiley, a partner at Smiley Bishop & Porter LLP in Atlanta, because if the panel thinks you're lying, you lose.
- Resist the temptation to complain about unrelated problems. Smiley said some clients "want to tell every problem in their life," right down to the details of their psoriasis. "It plays very badly," Smiley said. "It's unseemly."
- When your lawyer rehearses you before the hearing, take his or her instructions to heart. "Most clients have something they really, really, really want to say and you really, really, really don't want them to say," Smiley said. "It's generally along the lines of 'You know, I didn't trust that guy from the first day I met him.'" If your lawyer says to zip it with stuff like that, zip it.
- If you're a jerk -- and you know who you are -- stifle it for the hearing. "I tell them to become likeable at least for that day," Robbins said. "Arbitrators tend to lean over backward for people they like."