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Broker‐dealer customer complaints

Daniel J. Donovan (Partner, Donavan & Rainie, LLC, Baltimore, MD, USA; djd@donavanrainie.com)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 1 July 2004

Abstract

The seeds of many litigation and arbitration matters can be found in customer complaints that precede their filing. While few broker‐dealers would subscribe to the view that customer complaints are desirable, a customer complaint often provides the first opportunity to review and assess the facts that gave rise to such complaint. Effective use of this opportunity can lead to the early resolution of valid claims, which can result in a reduction in the number of arbitration and litigation matters and can reduce a firm’s overall expense and risk of defending arbitration and litigation claims. Customer complaints often arrive via correspondence written by the aggrieved customer. Such complaints should be taken seriously, investigated fully, and responded to promptly. Where such complaints are determined to have merit, broker‐dealers are well advised to make good‐faith efforts to resolve them promptly. Where complaints are determined not to have merit, well written and thorough explanations, which recite the relevant facts and clearly state the reason(s) for the firm’s conclusions, should be provided to the customers. Such explanations should be written with the expectation that one day they may become an exhibit in an arbitration or litigation proceeding.

Keywords

Citation

Donovan, D.J. (2004), "Broker‐dealer customer complaints", Journal of Investment Compliance, Vol. 5 No. 3, pp. 21-25. https://doi.org/10.1108/15285810410636460

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited