Institutional Investors Claims

Many institutional investors receive notice of securities class actions that have been filed against brokerage firms where they conducted business and involving a particular security they purchased. Because of the amount of our clients’ losses, our law firm “opts-out” these investors from the class actions and files individual securities arbitration claims on their behalf.

Institutional investors that have sustained significant losses within their investment portfolio should consider securities arbitration as an alternative means to recover their losses, as opposed to participating in a class action lawsuit. Since the passage of the Private Securities Litigation Reform Act in 1995, institutions have become increasingly active in serving as lead plaintiff in securities class actions, as opposed to securities arbitration. However, institutional investors, both public and private, should be aware of the benefits of filing an individual arbitration claim, as opposed to participating in a class action lawsuit.

By participating in a class action lawsuit, an institution will most likely recover only pennies on the dollar. However, if an institution has experienced significant investment losses, it may be more beneficial for it to file an individual securities arbitration claim. In 2003, KlaymanToskes conducted a detailed study of securities arbitration versus class action. The study concluded that investors who file a securities arbitration claim traditionally obtain an overall higher rate of recovery as opposed to participating in a class action lawsuit, and this is still true today. To view the full results of the comparison, click here.

When KlaymanToskes’s institutional clients are class members of a securities class action that has been filed against a brokerage firm where they conducted business and involves a particular security they purchased, KlaymanToskes “opts-out” these clients from the class action and files individual securities arbitration claims on their behalf.

Suitability Rules for Institutional Investors

Brokerage firms have suitability obligations to their institutional customers. To fulfill these obligations, brokerage firms are required to ensure that the institutional investor is capable of evaluating risks independently and determine if the institutional investor is making independent investment decisions. According to FINRA Rule 2111, a brokerage firm fulfills the customer- specific suitability obligation for an institutional account if:

  1. The firm has a reasonable basis to believe that the institutional customer is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies involving a security or securities and
  2. The institutional customer affirmatively indicates that it is exercising independent judgment in evaluating the member’s or associated person’s recommendations. Where an institutional customer has delegated decision-making authority to an agent, such as an investment adviser or a bank trust department, these factors shall be applied to the agent.

With substantial experience in securities arbitration and litigation in representing institutional investors, the attorneys at KlaymanToskes can provide the kind of expertise and knowledge that you need to maximize the value of your case, whatever the size of your claim may be. We analyze and assess our clients’ claims on a case-by-case basis, and provide personalized, detailed attention to those who have retained our firm. That way, you can be sure that no aspect of your case will be left unattended. Contact us today at 888-997-9956, and let us help you attempt to recover your investment losses.

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