The recession has left many investors furious—as well as broke—with an increasing number looking to regulators for answers, and perhaps a bit of punishment for those that led them astray. The Washington Post reports that complaints lobbied with the Financial Industry Regulatory Authority (FINRA) in 2009 have jumped markedly from last year, with indications that the outrage isn’t slowing down anytime soon.
FINRA records that the number of new arbitration cases filed with the regulator in the first three months of 2009 jumped 86 percent from the last three-month period, to a total of 1,715. New cases in 2008 were already 54 percent greater than those filed in the previous year, and FINRA anticipates the total this year to hit 7,000, up from about 5,000 in 2008.
The most popular complaint is breach of fiduciary duty, with many investors charging their brokers and dealers with failing to act in the best interests of their clients. 946 such cases were filed in the first three months of 2009, with 758 filings of misrepresentation and 631 alleging negligence.
Other statistics affirm a general distrust on the part of an investing public that has lost so much in the market decline. One survey conducted by the Boston Consulting Group (BCG) saw that only 22 percent of American consumers said they trusted investment advisors to protect their assets.
“When assets decline 30 or 40 percent in value, you realize there are few active advisors who have actually been able to make a difference in terms of performance relative to the market,” said a partner and managing director with the BCG.