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 Errold F. Moody Jr

       

FINANCIAL PLANNER

EXPERT WITNESS

INSTRUCTOR

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Securities Arbitration and Litigation

The issues below were developed over many years of teaching, acting as an arbitrator and financial planner, and as an expert witness.

Consumers, attorneys and arbitrators will find many of the comments helpful when facing potential unsuitable investments and irresponsible brokers.

You might also take a look at just a couple of the letters I have written to the NASD regarding inadequate arbitrator training. I had attempted for many years to get the powers to be to recognize the lack of training at the licensing level and to at least institute definitive training for arbitrators. I even submitted material for the 1996 NASD Arbitrator Reform (you'll see my name in the back). No success. Nonetheless, the issue of an understanding of the factors influencing securities application is mandatory if the industry is to truly provide adequate service to consumers- before the sale or thereafter in a dispute. That's even why I called my course for attorneys, "Practical Investment Theory and Application".

Addressing a problem after the fact rather than trying to resolve the problem up front is a lot of wasted effort and a fraud upon the public.

Lastly, as of 3/99, "John Ramsay, deputy general counsel for NASD regulation, says the basic information the brokerage (firm) gets on a (customer) form is usually only enough to make suitable recommendations for the simplest of mutual fund investments. For anything more complicated, an investment adviser would be expected to know much more about the customer."

An incompetent attorney can delay a trial for months or years. 
A competent attorney can delay one even longer.

From a defendant on a very involved merger case: "To anyone who is considering using the services of Errold Moody as one's expert for testimony or reporting, I recommend him without reservation. First of all, he is a compassionate and caring person who is part-teacher, part-analyst, part-scientist, and expert at the art of synthesizing accurate conclusions that make sense. He is a good listener who is able to integrate other experts' research and opinions in support of his client. In summary, I cannot recommend him highly enough."

and

"Mr. Moody. It's been a little over a year now and I am doing just fine and wanted to write you and again thank you for your help and guidance in my case with American Express. I just wish there were more people like you around today. You're one in a million."

From an attorney regarding my report for the Bankruptcy Appellate Panel Review, "Errold, thanks very much for your excellent analysis, which is extremely helpful".

Regarding an expert witness case: "Once again, thank you so much for your help with my brothers suit against American Express. Without your guiding hand and involvement, things would have turned out far differently. He seems more at ease and enjoys life so much more, now that all of that is behind him. You made it all possible."

The list below includes all articles and specific links in alphabetical order with accompanying description. The listings in the column to the right are separate sections for articles and links.

AMERICAN ARBITRATION ASSOCIATION LINK: has information about mediation, arbitration and other forms of alternative dispute resolution (ADR)

ARBITRATION LINK: An attorney provides some insight to the various issues of claims against a broker. But as with all legal "insight", attorneys still do not have a clue to diversification and the element thereto for risk and unsuitability.

ARBITRATION AWARD LINK: Then click on "SAC’s arbitration awards library" You can see how an actual case was decided.

ARBITRATION CASE FLOW LINK:

ARBITRATION EXPERT LINK: What is the purpose of an expert in mediation and arbitration by Roger Dietz.

ARBITRATION FILING FEE CALCULATOR LINK:  The NASD provides this fee calculator to help parties determine the filing cost of their claim. Parties should use the calculator to avoid delays in the process due to potential filing fee deficiencies.

ARBITRATION HEARING LINK:  Just What Happens at an Arbitration? By Mark J. Astarita, Esq. Good insight- though I do not agree with his separate comments about broker responsibility.

ARBITRATION PROCESS LINK: This site by attorney Mark Astarita gives a good overview of how an arbitration works including the underlying laws, prehearing discovery, rules of evidence, awards, etc. But from personal experience, I would say that arbitration is only as good as the insight and knowledge the arbitrators bring to the forum- and it ain't that good. As with the brokerage industry, none are required to know alpha, beta, correlation, diversification, standard deviation and the other elements of investment basics. Further, again from my experience, the attorneys don't have the foggiest idea of what they are either. So the cases are developed only partly on the issues of suitability and proper application and a lot on miscellaneous issues that can cloud the real reasons for losses. That said, don't assume that all the brokers are in error- many clients refused to do any homework as well so blame needs to be allocated in many instances. Nonetheless, the NASD, NYSE, PSE, etc. should be required to provide training courses on security application. I have tried to force them to recognize such fiduciary responsibility, but to no avail.

If you want to avoid arbitration, don't use people you TRUST to do investing- at least as the major requirement. Read Who Can You Trust  first.

ARBITRATION STATISTICS LINK:  All the things you need to know before you file. Actually, before you buy anything from a broker.

 

ARBITRATORS REFERENCE GUIDE LINK:  Talks about what it takes to become an arbitrator etc. But not one word about knowing what they are talking about. If you do not know diversification by the numbers, you do not know anything about investing.

ARTICLES

ASSET ALLOCATION: Different than diversification. Statistical/real life evidence as to how it works

ATTORNEY CONTINUING EDUCATION LINK:  It shows the Connecticut is a voluntary state. Let's be careful out there!

AWARDS: The split of responsibility between the agent and the firm. Not as clear cut as you would imagine.  

BAD ARBITRATION:  Comments by attorney Richard Skora. Excellent analysis

CHURNING: Basic definition and some adjustments in thinking.

CLASS ACTION LINK: This alphabetical database keeps you posted on the latest class-action proposals, and even provides a way for you to join them.

CODE OF ARBITRATION PROCEDURE LINK: Includes the NASD's Rules governing the areas of Arbitration and Mediation.

CONDUCT: Lots of problems and inconsistencies with arbitrators. Many do not understand the fundamentals of investing.

DIVERSIFICATION: What constitutes proper diversification with investments. How many stocks must you have in order to insulate a portfolio due to unsystematic risk. Mandatory information before anything is purchased.

EXPERT WITNESS CODE OF CONDUCT LINK:

EXPERT WITNESS QUALIFCATIONS: An attorney describes the four areas needed to be an expert

FIDUCIARY RESPONSIBILITY: Brokers do act as fiduciaries or at least as semi-fiduciaries. They should be held to higher standards than the basic prudent man rule.

FRAUD LINK: Quatloos.com is a public educational website covering a wide variety of financial scams and frauds, including wacky “prime bank” frauds, exotic foreign currency scams, offshore investment frauds, tax scams, “Pure Trust” structures and more.

INVESTOR ADVISOR LINK: You can search for an investment adviser firm on this website and view that firm’s Form ADV. Investment advisers file Form ADV to register with the SEC and/or the states. Form ADV contains information about an investment adviser and its business operations. Form ADV also contains disclosure about certain disciplinary events involving the adviser and its key personnel

LAWYER LINK: While the site covers all lawyers nationally, I am focusing on its ability to locate securities attorneys in a specific area. That said, the easiest way to determine if they are any good is to first ask what diversification is. Next, be sure they have a financial calculator because it is mandatory that one understands how money works.

LAWYER REFERRAL LINK: American Bar Association

MARGIN ACCOUNTS: How they work with some examples. You have a chance for extra returns, but you unquestionably take on higher risk. I have seen people use this when they had no reason for even being in the market.

MEDIATION LINK:  Instead of NASD arbitration.

MONITORING ACCOUNTS: What is the responsibility after an investment is made? After 3 months, 3 years?

NASD LINK:  This page lets you review potential changes in the laws, get material about your brokerage firm and agent, etc.

NASD ARBITRATION BROCHURE LINK:-- information from the NASD summarizing the process of broker arbitration.

NASD MANUAL LINK

NATIONAL ASSOCIATION FOR COMMUNITY  MEDIATION LINK

THE PLAYERS: What are the backgrounds of the brokers and agents. You'll be surprised.

PRUDENT MAN RULE LINK: The Uniform Prudent Investors Act was completed by the Uniform Law Commissioners in 1994. This act removes much of the common law restriction upon the investment authority of trustees of trusts and like fiduciaries. It allows such fiduciaries to utilize modern portfolio theory to guide investment decisions. A fiduciary’s performance is measured on the performance of the whole portfolio, not upon the performance of each investment singly. The act allows the fiduciary to delegate investment decisions to qualified and supervised agents. It requires sophisticated risk-return analysis to guide investment decisions.

RISK: Basic definitions that must be known by all investors BEFORE investing.

SECURITIES ARBITRATION STATISTICS LINK: Arbitration, mediation, types of cases, closed cases and more.

SECURITIES CLASS ACTION CLEARINGHOUSE LINK: This site by the Stanford Law School and has some good info on securities class actions, pleadings and more.

SECURITIES CLASS ACTION DESIGNATED SITE LINK: A public site by class action attorneys that provide info on current cases and more. Good insight to certain securities transactions and violations.

SECURITIES EXCHANGE COMMISSION (SEC) LINK: Get info on bad agents, access to EDGAR database and more.

SECURITIES FIRMS CRD LINK:  NASD provides CRD numbers for all registered securities firms. You will need these if you file against a firm.

SECURITIES FRAUD AND PROTECTION LINK: This site by a Massachusetts attorney has some good articles explaining the concepts of broker duties and responsibilities and what to do if you believed you have been defrauded. He does note that "Brokers are held to certain standards of the securities industry and must pass various examinations in order to be licensed." While true, he- and literally all other attorneys- still miss the point that licensing has NEVER provided any of the fundamentals of investing and therefore was never intended to protect- even really help- investors to begin with. Do your homework up front so you won't have to use arbitrations to try and get some of your money back.

SECURITIES LAW LINK: This site contains up to date information about arbitrations, changes in the law and a lot more that is valuable to consumers and professionals involved in industry disputes. I don't necessarily agree with some of the interpretations- suitability for example- but there is sufficient viable material that is cause for review.  

SECURITIES LITIGATION LINK: A Price Waterhouse site designed to provide info to the legal and business community.

SELF REGULATION IN TODAYS SECURITIES MARKETS  LINK: An analysis of how it occurred and what is gong on now. Professional article. Very good

SETTLEMENT:  This is my report against a CFP in Florida that resulted in a significant settlement- even though the CFP Board of Standards had provided him a full exoneration.

SOPHISTICATED INVESTOR: Very few investors are sophisticated. Very few brokers are sophisticated.

STATE SECURITIES REGULATORS LINK:  Though I doubt that a one knows diversification

SUITABILITY:  The NASD rules indicate that an investment must be suitable for a client. But how can anyone determine such suitability if they are not grounded in any of the fundamentals of risk and reward? I submit that they cannot.

UNIFORM PRUDENT INVESTORS ACT LINK:  Objectives of the Act. UPIA makes five fundamental alterations in the former criteria for prudent investing. All are to be found in the Restatement of Trusts 3d: Prudent Investor Rule.

(1) The standard of prudence is applied to any investment as part of the total portfolio, rather than to individual investments. In the trust setting the term "portfolio" embraces all the trust's assets. UPIA § 2(b).

(2) The tradeoff in all investing between risk and return is identified as the fiduciary's central consideration. UPIA § 2(b).

(3) All categoric restrictions on types of investments have been abrogated; the trustee can invest in anything that plays an appropriate role in achieving the risk/return objectives of the trust and that meets the other requirements of prudent investing. UPIA § 2(e).

(4) The long familiar requirement that fiduciaries diversify their investments has been integrated into the definition of prudent investing. UPIA§3.

(5) The much criticized former rule of trust law forbidding the trustee to delegate investment and management functions has been reversed. Delegation is now permitted, subject to safeguards. UPIA § 9.

LETTERS REGARDING LIMITED ARBITRATOR and PLANNER TRAINING:

NASD/John Pinto,

NASD/Deborah Masucci

NASD/David Ruder

The SEC pdf'd my letters to them in September of 2004 regarding the legality of financial planners

CFP Board of Standards regarding ineptness and fraud

My letter regarding securities petition on arbitrator reform

Consumer links



 ARTICLES

ARTICLES

ASSET ALLOCATION

AWARDS 

BAD ARBITRATION

CHURNING

CONDUCT

DIVERSIFICATION

EXPERT WITNESS QUALIFCATIONS

FIDUCIARY RESPONSIBILITY

MARGIN ACCOUNTS

MONITORING ACCOUNTS

NASD PROPOSAL FOR ARBITRATOR EDUCATION AND TRAINING

PLAYERS

RISK

SETTLEMENT 

SOPHISTICATED INVESTOR

SUITABILITY

LINKS

AMERICAN ARBITRATION ASSOCIATION

ARBITRATION

ARBITRATION AWARD

ARBITRATION CASE FLOW

ARBITRATION EXPERT

ARBITRATION FILING FEE CALCULATOR

ARBITRATION HEARING

ARBITRATION PROCESS

ARBITRATION STATISTICS

ARBITRATORS REFERENCE GUIDE

ATTORNEY CONTINUING EDUCATION

CLASS ACTION

CODE OF ARBITRATION PROCEDURE

EXPERT WITNESS CODE OF CONDUCT

FRAUD

INVESTOR ADVISOR

LAWYER

LAWYER REFERRAL

MEDIATION

NASD

NASD ARBITRATION BROCHURE

NASD MANUAL

PRUDENT MAN RULE

SECURITIES ARBITRATION STATISTICS

SECURITIES CLASS ACTION CLEARINGHOUSE

SECURITIES CLASS ACTION DESIGNATED SITE

SECURITIES EXCHANGE COMMISSION (SEC)

SECURITIES FIRMS CRD

SECURITIES FRAUD AND PROTECTION

SECURITIES LAW  

SECURITIES LITIGATION

SELF REGULATION IN TODAYS SECURITIES MARKETS  

STATE SECURITIES REGULATORS

UNIFORM PRUDENT INVESTORS ACT

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