Table of Contents

Introduction

1
Chapter 1:
So You Lost Money - So What! 5
Who cares! 5

The dream & the nightmare

 6
Everything is beautiful 6
I thought you were on my side 6
And, there’s no commission on this 7

Here comes the pitch

 8

The opening scene

 8

Act II—the second call

 10

Now what?

 11

More Wonderful Things

 11

Do you call that fair?

 12
Chapter 2:
Fault or No-Fault 13
I did it all by myself 13
On the other hand 15
The big question 16
Chapter 3:
And The Winners Are 19

Unsuitable investments

 19

Churning

 19
Mutual fund switching 20
Unauthorized trades 20
Order failure 20
“Blue Sky” violations 20
Penny stock scams 20
House Stocks 20
Fraud and misrepresentation 20
And now the losers 20
Market manipulation 21
Insider trading 21
RICO violations 21
Punitive damages 21
You made the loss bigger 22
You went along with it 22
You deserve to lose 22
You want money you would have made 22
You have been doing it for years 23
You waited too long 23
You knew too much 23
You lack credibility 23
You bite off more than you can chew 24
Chapter 4:
Unsuitability 25
Suitable for who? 25
The real world 28
Common sense takes a bow 28

What you must do to win

 29
Chapter 5:
Churning 33
Churn & earn 33
Churn & burn 33
Activity letters—a key warning sign 33
Turnover 35
Who’s in charge here? 36
Hidden churning losses 37
How bad did it hurt? 38
What if they had left it alone? 38
What if I had left it in the bank 39
Let’s take away the money they made 39
What you must do to win 40
Chapter 6:
Mutual Fund Switching 43
But I already have a manager 44
What you must do to win 44
Chapter 7:
Unauthorized Trading 47 47
Alright,  go ahead and do it 47 47
Whatever you think best 47 47
You did what? 48 48
What you must do to win 50 50
Chapter 8:
“You Didn’t Do It Yet???” 51 51
Order failure 51 51
Penny stock order failure 52 52
What you must do to win 53 53
Chapter 9:
Blue Sky Law Violations 55
What’s in a name? 55
An amazing weapon 56
Amazing quality #1 57
Amazing quality #2 57
Amazing quality #3 57
What you must do to win 57
Chapter 10:
Penny Stock Scams Aren’t Penny Ante 61
Abuse with a capital “A” 61
The stock exchanges 62
Then came NASDAQ 62
That number is unlisted—Over-The-Counter Stocks 63
Designated Security rules 64
But aren’t they risky? 65
It’s the principal of the thing! 65
What you must do to win 67
Chapter 11:
House Stocks 69
Never Say Die—We’re Back! 69
A Method to their Madness 70
The New Scheme 70
Here comes the first pitch—the curve ball 71
NIKE rebuttals 72
The Fastball—Now that you just bought NIKE, sell it! 74
A little twist to the scheme 74
Related Abuses 75
Does this sound familiar to you? 75
What you must do to win 76
Chapter 12:
The Truth, The Whole Truth And Nothing But... 77
10b-5: Fraud & misrepresentation 77
Good bye caveat emptor 77
The all-purpose rule 79
The most famous rule of all 79
Watch out, Bob! 80
The right kind of wrongdoing 81
You had to act 81
And because of the wrongdoing 81
You had to act reasonably 82
You had to suffer a loss 82
What you must do to win 82
Chapter 13:  
What Next? 85
Pick A Fight - That’s What! 85
Plan Your Attack 85
The Kit 86
Chapter 14:
So Just What is Arbitration? 89
Fighting and dueling 89
Why not a lawsuit? 89
Why arbitrate? 90
Securities arbitration? 90
You had no choice 90
The Dueling Code 91
Who are those guys anyway? 91

But is it fair?

 92
I want him out of here! 92
How does an arbitration get started? 92
The hearing 93
The award 93
Simplified arbitration 93
Chapter 15:
Time Is Not On Your Side 95
Your time is up! 95
So how long do you have? 96
Records, what records? 96
They went thataway 96
What was that again? 96
“And when they got there,  the cupboard was bare" 97
The solution—get going! 97
Chapter 16:
Pull Yourself Together 99
First, the paperwork 99
Put yourself on paper 100
Chapter 17:
State Your Claim 103
Statement of Claim 103
Here we go folks... 104
Let the boss pay for it 104
The body 105
Always ask for a hearing 106
Who are you? 106
What’s the story? 107
What went wrong? 108
Name that firm 110
Be an exhibitionist 111
It’s your turn now 111
Chapter 18:
The 30 Day Time Bomb 113
What we’re trying to do here 113
Dear broker... 114
How the bomb works 115
What’s it all about 116
Name, rank and serial number 116
This is my problem, see... 116
Let’s make a deal 117
Or else... 117
The deadline 118
The guest list 118
The other stuff in the envelope 119
Arbitration cover letter 119
Call in the air strikes! 120
The bottom line 122
Chapter 19:
Filing Your Claim 123
Sign here please 123
Get yourself a copy machine 123
Check please! 124
The check is in the mail 125
Door number 1 125
Door number 2 125
Door number 3 126
Chapter 20:
Their Answer 127
We don’t know what you’re talking about 127
If it did happen, it was your fault anyway. 128
Legal mumbo-jumbo? 128
Statute of limitations 128
Laches 128
Waiver, estoppel & ratification 129
Assumption of risk 129
Failure to state a claim 129
Claimant’s expertise 130
Unclean hands 130
Failure to mitigate 130
Contributory negligence 130
Good faith 131
Will these defenses stand up? 131
And the answer is... 131
So what do you do with the answer 134
Chapter 21:
The Paper Chase Part I, What To Ask For 137
Should you try to look at their cards 137
What you ask for and why 137
And besides that 138
U-4, U-5, BD and more 139
How to make a document request 140
What if they refuse? 143
Chapter 22:
The Paper Chase Part II: Their Document Request 145
They try to look at your cards 145
Why do they want to know? 146
Are they kidding or what? 156
Just say “NO!” 156
The Pre-hearing Conference 158
A Brief Word about Mediation 159
Should you go for it? 160
Chapter 23:
The Secret Of Success 161
The first message—credibility 161
A horror story 162
The second message—you did your best 163
The third message—you were treated unfairly 164
OK—Here’s the secret 164
Chapter 24:  
The Main Event—the Hearing 165
The 20-Day Exchange 165
Witnesses, what witnesses? 166
How it works 166
Good news & bad news 167
What you should focus on 168
Your opening statement 168
Your testimony 169
A few words about being cross-examined 170
Your turn to ask questions 170
Why you might not want to ask any questions 171
So why should you ever ask questions? 172
A big goof 173
Get in the last word 174
It’s all over 176
Chapter 25:
Who Won?—the Award 177
When do you find out if you won? 177
Why not—what’s going on? 177
What—no reasons! 177
When do you get your money? 178
What are my chances of winning anyway? 178
GAO: Smaller Claim=Higher Recoveries 178
Our Last Words 179
Appendix A: Sample Statements of Claim 181
Appendix B: State Securities Regulators 203
Appendix C: The Regulators 209
Appendix D: Arbitration Sponsors and Hearing Locations 211
Appendix E: NASD Regulation Offices 215
Appendix F: Sample Award Letter 219
Appendix G: U.S. Disclosure Info Centers 221
Appendix H: Public Disclosure Program 223
Appendix I: New Account Form 225
Appendix J: Penny Stock Risk Disclosure Documents 227
Appendix K: SEC Form BD 233
Appendix L: SEC Form U-4 245

Appendix M: SEC Form U-5

 253
Appendix N: Submission Agreement 257
Appendix WWW: Internet Resources 259

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