PITTSBURGH, Pa., Nov. 2 /PRNewswire/ -- Thanks to the Duquesne University School of Law, Pennsylvania investors may be able to get a helping hand in resolving financial disputes against investment professionals. The Securities Arbitration Practicum, created by the School of Law and supported, in part, by the Pennsylvania Securities Commission, provides free legal representation to small investors who cannot afford legal assistance in resolving disputes with investment professionals or whose claims are so small that it would not be feasible to obtain private legal counsel.
"The Securities Commission believes that this service will be quite useful to investors of modest means, especially senior citizens, when they find themselves in a dispute with a broker-dealer or other investment professional," explained Commissioner Tom Michlovic of the Pennsylvania Securities Commission. "Right now, the Practicum has nine students working with clients on five different investment cases."
The Practicum provides free legal representation to small investors who have suffered financial loss due to negligent and fraudulent conduct by broker-dealers. Preference is given to senior citizens. Investors must meet two basic qualifications:
-- Annual household income less than $75,000
-- Investment losses that are less than $50,000
The law students also benefit from the program, which provides practical securities law experience for aspiring attorneys. Launched in 2001, the Duquesne program is one of only five in the country -- and the only one in Pennsylvania.
"In 2006, our students gained first-hand experience while helping a young Pennsylvania couple. The husband and wife had an annual income of $52,000 and had inherited $35,000 which they wanted to invest for their children's education," noted Practicum Director Alice L. Stewart. "A broker advised the couple to invest in a whole-life policy, using investment earnings to pay the premiums. When the dividends failed to cover the costs, the broker strongly urged the couple into a margin account and a high-risk fund that is more appropriate for investors looking for aggressive growth. When the clients voiced their concerns, the broker assured them that he had personally invested in the fund and promised to notify them if their investment dropped by more than 20 percent."
Later, the couple heard a news story about the fund's decline and discovered that their investment value had dropped from $30,000 to $9,600 in only a few months' time. They called the broker immediately and learned that he had been fired and had moved on to another brokerage house.
"The students researched the investments and the underlying insurance policy and discovered that the brokerage firm's parent company was the underwriter of the policies, and brokers were offered incentives for selling these whole-life policies," Stewart continued. "Our students presented their case to opposing counsel and negotiated a settlement with the brokerage firm, recovering $13,000 of the couple's loss."
"More often than not, once the scam artist gets his hands on the money, it's gone," Michlovic noted. "In this case, the students were able to recover about sixty-five percent (65%) of the original investment. While the loss was very hard for the young family -- the legal counsel cost them nothing -- and the students were able to return significantly more than an average recovery."
If you know someone in need of the Practicum's expertise, please contact Alice L. Stewart, director, Duquesne University School of Law Securities Arbitration Practicum, at (412) 396-5877.
Pennsylvania Securities Commission
