Posted by: Robert Hutchinson
August 09, 2006

One of President Harry Truman's most quoted phrases was "the buck stops here." Government bureaucrats had become famous for passing the buck: delaying or deferring action to the next "higher up" level of government. Of course, delay is not the defrauded investor's friend. The statute of limitations clock is ordinarily ticking. And this is the very thing defense lawyers seize upon when the delay is long enough.

Often an injured investor will take his or her problem to the Securities and Exchange Commission (SEC), the state securities commissioner or to the National Association of Securities Dealers, Inc.(NASD) with the thought that they will take action.

It depends on what you mean by "action." Often these agencies will do nothing; sometimes they will initiate some form of proceeding, which in the usual case means that they will seek an administrative sanction. In other words, they may proceed against a broker or advisor by seeking to impose a fine, effect a license suspension and/or obtain a cease and desist order as to future actions.

Worse yet, the NASD proceedings are secret, and the agency will not reveal what it is up to, even though it may have a mountain of evidence that would be helpful to the investor. Remember, the NASD at its heart is a so-called "SRO" or "self regulating organization," and so it has developed rules that often favor its broker members and disfavor the investor.

What is interesting is that it is not just individual investors that often take their problems to these agencies, but many attorneys who do not practice securities law either do the same thing or advise their clients to do so in the mistaken belief that these agencies will get their client's money back. The end result is that someone often "passes the buck" and not much happens - maybe some sort of administrative action, and precious time has been wasted.

But the bottom line is that none of these things puts one lost investment dollar back into the pocket of the investor.

It is therefore crucial for the investor to retain an attorney who knows the ropes of securities law and who has the ability to take action - by filing a complaint or claim before a body or court that has authority to make a decision and enter an order for damages, and to litigate the matter if necessary. This requires both knowledge of securities law and trial skills.

Filing a case in the appropriate forum forces the investment advisor or broker into the position of having to respond to it and defend their action with an impending deadline for arbitration or trial. In other words, this gets a different clock ticking, but this time it is a clock that favors rather than disfavors the investor. That is the way to stop the buck and put it into the pocket of the deceived investor.

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