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Increased FINRA Arbitration in 2009

According to the Financial Industry Regulatory Authority (FINRA), 7,137 arbitration cases were filed by investors last year, up 43 percent from 2008 and more than doubling the number of cases filed in 2007.

The volume of cases increased in every category, with the exception of online trading. The increased type of controversies include margin calls, churning, unauthorized trading, failure to supervise, negligence, omission of facts, breach of contract, breach of fiduciary duty, unsuitability and misrepresentation. The largest number of cases involved breach of fiduciary duty, as cases filed soared 48 percent to 4,206 last year. Misrepresentation and negligence claims were second and third on the list, cited in 3,408 (70% increase) and 3,405 (113% increase) cases, respectively.

Cases involving mutual funds and common stock were the most numerous, with the former being the subject of 1,556 claims last year, up 45% from 2008. Common stock claims increased by 77% from the previous year, up to 1,367 claims in 2009.

Although FINRA arbitration filings have vastly increased, it is noteworthy that the turnaround time for such cases in 2009 decreased by 12%. This means that investors are seeing resolutions to their cases at a faster rate.

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