Lost a Pile on the NASDAQ? Maybe It Wasn’t Your Fault

June 25, 2001

"Brokers forgot the rules," says lawyer Darren Blum, who won a $98,000.00 award last year after arguing that a broker failed to make suitable recommendations based on his client's assets and investments experience. The client, a 73-year-old bookkeeper in Hollywood, Fla., agreed to put nearly $200,000.00 - or roughly 80% of his liquid net worth - into a stock he'd never heard of, Sigma Design. "I was buying like crazy on margin," says the bamboozled bookkeeper. "And I got wiped out."

What percentage of your portfolio was in the tech sector? More than 25%, and some lawyers say you may be able to argue there was failure to diversify.

How old are you, and how much did you lose? The Older and destitute, the more sympathy you are likely to generate.

Did you list your initial investment objective as "speculate"? If so, there's still a chance you can convince arbitrators that as an amateur investor, you didn't know what you were getting into. "Margin call? What's a margin call?!"

Is the brokerage bankrupt or closed? A pretty good sign of incompetence, but NASD can't force defunct brokers to pay you. A new rule lets you bypass the mandatory arbitration process and ask a judge to start freezing assets.