Arbitration versus Litigation

Arbitration versus Litigation
The case under review is that of arbitration versus litigation as it
involves the two options where Mr.g can adopt any. It is a case caused
by fraudulent stock broker and Mr. Groetsch who was not comprehensively
aware of the dynamics of the investment portfolio under review.
According to the case study description, Mr. Groetsch instead his money
in a Medical Capital Holdings bond worth $500,000 after a sale by Ron
Carazo, a securities America broke. Currently, Mr. Groetsch has filed an
arbitration suit for compensation of the sale as other groups have filed
a class action suit. This paper will discuss the option that the judge
at the arbitration can take in relation to the arbitration proceeding
with reference to the class suit.
Discussion of the Options
The first issue is that the judge should allow the arbitration to
proceed. This is because Mr. Groetsch has the freedom to pursue any
legal option at his disposal and as he deems fit. If Mr. Groetsch feels
that continuance with arbitration is the best way to advance his claims,
then the judge should let the arbitration process proceed. It is
important to consider that class suits take a longer to prosecute since
the attorney spends time taking cases of all the claimants. Another
reason for proceeding should be the cost of the case as arbitration is
cheaper than class suit. In a class suit, the attorneys charge very high
fees which may be a limitation to the complainant.
However, arbitration is conducted between the conflicting parties and
the arbitrator on private basis with an informal and limited
presentation of evidence. The arbitration process can start immediately
an arbitrator is identified and mandated and a conflict may take a short
time to resolve. Through arbitration, it is possible that Mr. Groetsch
may get a bigger award for the loss than the members included in the
class action suit. Moreover, his award may give attorneys for the class
suit addition evidence for their case by setting precedence for the
imminent litigation. The receipt of ten cents on the dollar by others is
irrelevant because they decided to pursue litigation as compared to
The second option for the judge is to delay the arbitration process
until the class action suit filed by other victims is settled. This
option could work for Mr. Groetsch favorably if the plaintiffs in the
case receive a sizable award on litigation. Moreover, the outcome of the
class suit litigation process could also be used as precedence or
further evidence in Mr. Groetsch’s arbitration case.
However, in case the class action involves a big number of customers, as
illustrated in the case study, the claimants may receive only a small
award in each settlement. This could affect the arbitration case
adversely and may actually reduce the amount that could be awarded to
Mr. Groetsch. It should be noted that the arbitrator cannot on his
capacity advice any party on the conduct of their case or even get
involved as an interested party. The broker is the person under
responsibility to since he portrayed the portfolio as a safe and a
secure investment. The turning out of the investment to be a fraud could
not be established by Mr. Groetsch on normal due diligence procedure.
The third option for the judge is to suggest to Mr. Groetsch on his
possibility to drop the law suit of arbitration and join one of the
class action suit for litigation. The judge cannot enforce this option
on Mr. Groetsch but can only suggest it as an option which he can take
or drop. If he decides to drop the arbitration suit, then he will not be
expecting any implication of the arbitration on his claims and not even
on the class action suits. If he decides to pursue the arbitration
process, Mr. Groetsch will expect the arbitrator to uphold his right for
compensation. The continuance of the arbitration process creates
expectations for compensation funds to be spent by the company and
expectations or receipt by the complainant.
Mr. Groetsch can explore other alternatives other than litigation or
following the arbitration process at hand. One of these alternatives
available to both Mr. Groetsch and the fraudulent broker is out of court
compensation which the judge could be willing to consider. This will
involve full compensation to Mr. Groetsch for the loss by America
Securities. According to the description of the case study, the company
may be willing to take the settlement in the arbitration which will see
Mr. Groetsch fully done with the loss. The broker company is liable as
the investment package was considered highly risky and could only be
sold yo the so called accredited investors.
In conclusion, the issue is whether the case should be resolved in
arbitration just like in the normal securities industry, or whether it
should be included into the existing class-action lawsuits. The class
suit is filed against the company, Securities America for financial
compensation. Arbitration is usually the preferred way out by many
investors despite being an uncertain bet. Arbitration has proved to be a
successful forum for some of the Securities clients in America. However,
the judge may decide otherwise for Mr. Groetsch’s case as he deems fit
depending on the underlying circumstances relating to Mr. Groetsch’s
arbitration and the class action suit.

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