Washington D.C. partner Mark Costley was quoted in an Ignites article titled, “As Crisis Fades, So do Fund Arbitration Claims.”
Fading reverberations from the financial crisis have helped to drive down the number of Finra arbitration claims against brokers that involve mutual funds in the past five years. Mutual fund arbitration claims dropped to 308 in 2013 from 1,556 in 2009. By comparison, 392 claims involving mutual funds were filed with the Financial Industry Regulatory Authority in 2012 and 652 in 2011, according to data from the self-regulatory organization.
The drop in claims involving mutual funds corresponds to a 14 percent decrease in the number of all types of arbitration claims in 2013 versus 2012. Last year through November 3,442 total claims were filed, down from 4,022 in 2012 and 7,137 in 2009.
Some say fund arbitration claims could climb again, however, particularly if interest rates go up and bring bond fund losses. They also cite the rapid growth of alternative funds and products as a potential area of future claims. The focus of Finra arbitration claims is influenced by the types of investments brokers are promoting to clients.
The type of security that spurred the greatest number of arbitration claims in 2013 through November was common stock, with 511 cases, followed by mutual funds. There were 165 variable annuity claims and 113 annuity claims. Finra notes that each case can be coded to contain multiple security types.
“Arbitration claims centered on mutual funds will usually be higher in number than claims involving other types of securities by virtue of the fact that they are so broadly sold,” said Mark.