What Can I Do If...

• I Think I Have Been Defrauded?
• I just found out that my broker held back information he had on a stock that he recommended, and I lost money?
• I am nearing retirement age and my broker put the majority of my assets in stocks that are now worth a lot less?
• I Think I Own Some Securities, but I Have No Records Showing That I Own Them?
• My Securities Certificates Are Lost, Stolen, or I Asked for Them and They Never Came in the Mail?

What Can I Do If I Think I Have Been Defrauded?

Investors who suspect they have been defrauded by a broker or brokerage firm can pursue the following avenues of relief:

• Formal disciplinary action: The National Association of Securities Dealers (NASD) and the various State securities divisions offer a formal complaint process to investors, with the filing of a complaint triggering an investigation of the broker or brokerage firm. If the investigation proves that the broker or firm has engaged in any unlawful practice, the broker will be subject to formal disciplinary action, such as a suspension of the broker or the firm's registration to sell securities. NASD and state securities division complaints can be filed at any time and do not require the assistance of an attorney
• Complaint in arbitration against broker/brokerage firm: Most investors who have been defrauded and sustained a loss want to recover money, in which case they must also file a complaint in arbitration (or a formal lawsuit in rare cases). Disputes between investors and their brokers are generally subject to the arbitration process because most brokerage firms use an arbitration agreement as a condition to establishing a brokerage account
• Participate in a class action: Since the rules governing arbitration generally exclude cases brought as class actions, it is possible for an investor to seek redress in court by participating in a class action.

I just found out that my broker held back information he had on a stock that he recommended, and I lost money. What rights do I have?

Stockbrokers are required to act openly and honestly with their customers and to disclose all material facts regarding an investment recommendation. Because they occupy a position of trust and confidence, they may be held liable for losses in a customer's account that are the result of the failure to disclose important facts to clients. Such facts might include the risks of an investment, hidden fees or commissions paid to the broker, the track record of the investment promoters, and anything else that would be considered important to the typical investor.

I am nearing retirement age. My broker put the majority of my assets in stocks that are now worth a lot less. What can I do?

Brokers have an unquestioned duty to deal honestly, fairly and in good faith with their customer. Both the NYSE and NASD have specific rules requiring that a broker know his customer and his objectives. A broker's recommendations must be reasonably suitable for the customer based upon his financial situation and investment goals. If the broker improperly recommends risky and speculative investments that are not suitable for the individual customer, he may be held liable for any resulting damage.

I Think I Own Some Securities, but I Have No Records Showing That I Own Them. What Can I Do?

If you are trying to establish whether you or a family member own securities or not, here are some steps you can take.

Establishing your ownership is easier if you can remember which firm arranged for your purchase of the security and whether the security was held in your name or in the firm's name. Depending on how you came to own the security, take these steps:

• Brokerage Firm
  If you bought the security through a brokerage firm, contact the firm and ask if they have a record of your ownership. The firm would have purchased the stock for your account either in your name or the firm's name. Either way, the brokerage firm may have a record of the purchase. But keep in mind, brokerage firms are only required to keep these records for six years.

• Transfer Agent
  If the brokerage firm cannot find any record of your account, you should contact the transfer agent who handles the company's securities. Transfer agents keep records of securities owners who hold certificates.

  You can find the name and address of a company's transfer agent in the company's annual report. Many companies file their annual reports with the SEC. Check the SEC's EDGAR Web site to see if the company filed its annual report with the SEC. If no annual report is on file, call the company for the transfer agent's name and address. Some companies also maintain investor relations offices that can be contacted by telephone and may be able to provide useful investor information.

• Company
  If the stock was purchased directly from the company issuing the securities, then the company should have a record of the purchase. The company should also be able to tell you whether it issued physical certificates (on paper) or whether the sale was simply recorded in its computers, called book entry.

  If the company is not actively traded and you cannot locate it, you can contact its state of incorporation for information. A state's office of the secretary of state or corporate division usually maintains state corporate records.

States

If these efforts prove futile, you may have to try another approach. Your securities or your securities account may have been turned over to the state for safekeeping according to the state's laws on escheatment. Under these laws, broker-dealers, transfer agents, and financial institutions are required to turn over securities and other unclaimed property to the state of the owner's last known address after they have lost contact with the owner for a period of time.

Each state has an office that handles unclaimed property, either for safekeeping or disposal. You can search the records of each state's inventory of unclaimed property on the National Association of Unclaimed Property Administrators website. Check the unclaimed property listings in each state where you had dealings with a broker or transfer agent. That may help you determine whether that state is holding your securities or account.

My Securities Certificates Are Lost, Stolen, or I Asked for Them and They Never Came in the Mail. What Should I Do?

Brokerage firms, banks, transfer agents, and corporations have procedures in place to help investors replace lost or stolen certificates.

If your securities certificate is lost, accidentally destroyed, or stolen, you should immediately contact the transfer agent and request that a "stop transfer" be placed against the missing securities. Your broker may be able to assist you with this process. The "stop transfer" helps to prevent someone from transferring ownership from your name to another's. The transfer agent or broker-dealer will report the certificates missing to the SEC's lost and stolen securities program.

If you are expecting a certificate through the mail and it doesn't arrive, you should immediately contact the organization that arranged the transaction, typically your brokerage firm. While many companies choose to use registered or certified mail to deliver securities certificates to individuals, some prefer regular mail so as not to call attention to the potential value of the item.

You can get a new certificate to replace the missing one. However, before issuing a new certificate, corporations usually require the following:

• The owner must state all the facts surrounding the loss in an affidavit
• The owner must buy an indemnity bond to protect the corporation and the transfer agent against the possibility that the lost certificate may be presented later by an innocent purchaser. The bond usually costs between one and two percent of the current market value of your missing certificates, and
• The owner must request a new certificate before an innocent purchaser acquires it. If you later find the missing certificate, you should notify whomever you called to place the "stop transfer" so that the lost or stolen securities report may be removed. Otherwise, you may have difficulty selling the securities.

We recommend that you keep a copy of both sides of your certificates in a place separate from the certificates themselves. If a certificate is lost or stolen and then transferred on the books of the transfer agent to another owner, it may be impossible for you to establish that you owned it because the transfer agent will no longer have a record of your name. But if you have a record of the certificate numbers, the transfer agent should be able to reconstruct when it was transferred and to whom.

Securities certificates are valuable and should be safeguarded. To avoid the cost and burden of safeguarding certificates, some investors opt for letting their brokerage firm or another company hold their securities for them. And increasingly, certificates for many securities are not even available: with these book entry securities, your ownership is reflected on the books of a company.

The actual transfer of securities is governed by state law, rather than the federal securities laws. The SEC seldom has any jurisdiction over these issues. The Securities Transfer Association, a private group, has adopted guidelines for most transfer agents, and may be able to answer any further questions that you have.

What Can I Do If I Think I Have Been Defrauded?

Investors who suspect they have been defrauded by a broker or brokerage firm can pursue the following avenues of relief:

• Formal disciplinary action: The National Association of Securities Dealers (NASD) and the various State securities divisions offer a formal complaint process to investors, with the filing of a complaint triggering an investigation of the broker or brokerage firm. If the investigation proves that the broker or firm has engaged in any unlawful practice, the broker will be subject to formal disciplinary action, such as a suspension of the broker or the firm's registration to sell securities. NASD and state securities division complaints can be filed at any time and do not require the assistance of an attorney
• Complaint in arbitration against broker/brokerage firm: Most investors who have been defrauded and sustained a loss want to recover money, in which case they must also file a complaint in arbitration (or a formal lawsuit in rare cases). Disputes between investors and their brokers are generally subject to the arbitration process because most brokerage firms use an arbitration agreement as a condition to establishing a brokerage account
• Participate in a class action: Since the rules governing arbitration generally exclude cases brought as class actions, it is possible for an investor to seek redress in court by participating in a class action.

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