"Go to arbitration in hope, but don't expect to win. It's not a fair process," says Mensack, who now runs a Cherry Hill-based 401(k) consulting firm helping companies pick the right plan without getting ripped off by hidden fees.
FINRA is a self-regulatory organization with the power and responsibility to supervise broker-dealers and brokers, according to Stuart Berkowitz, a securities lawyer representing customers.
"What do the public arbitrators look like? Many of them are lawyers who either are employed by firms that represent brokerages, want to represent brokerages, or do primarily defense work. Nonlawyers are predominately from the corporate world, conservative and often retired," he notes.
"What are the results? Less than 50 percent of customers receive anything and if there is any award there is usually just a few cents on a dollar," he adds.
In Mensack's case against Morgan Stanley, the insult of losing against the Wall Street firm was added to the injury of FINRA case administrator Arthur Baumgartner's claiming he lost a good portion of the audio recording. Turned out, it wasn't his first time misplacing evidence.
"Only after filing a FINRA ombudsman complaint did he tell me on the phone that the missing eight hours was never recorded due to human or mechanical error," Mensack says. It turned out that this same case administrator, Baumgartner, worked on a Massachusetts case initiated in 2008 in which records also went missing, according to the Massachusetts Lawyers Weekly.
So, be wary of fighting your broker, and prepare yourself; you may end up in kangaroo court.