But walk, don't run.
Area securities experts warn it may take a year or longer for the government to decide how to parcel out the $387 million that's been promised to duped investors. And chances are people who do submit claims will receive only a small percentage of what they lost.
"The actions of these brokerages wiped out billions in investments, but the amount they have agreed to pay for restitution amounts to less than $5 per investor," said Joseph Meyer, an Ormond Beach investment adviser.
The proposed payback amounts to only about one-fourth of the $1.4 billion settlement that was reached last week between 10 big-name brokerages and regulators led by New York Attorney General Eliot Spitzer.
Salomon Smith Barney, Morgan Stanley, Merrill Lynch, USB and others named in the case did not admit any wrongdoing. However, they agreed to pay the money to get rid of charges that from 1999 through at least 2001 they issued overly rosy stock recommendations to curry favor with investment banking clients.
Much of the tainted research dealt with Internet start-ups and telecommunications firms that soared before tech stocks crashed in early 2000. The U.S. Securities and Exchange Commission said an administrator will be appointed soon to oversee the restitution process. However, the agency has not issued any guidelines yet for how an investor can submit a claim.
That hasn't stopped class-action lawyers from jumping on the Internet and urging investors to submit their names and information about their losses.
Meyer said the case could open the door to compensation far greater than the initial $387 million. The settlement allows individual arbitration and mediation cases to proceed, and the National Association of Securities Dealers is projecting its arbitration caseload will soon jump to 30,000 cases, triple the current level.
Philip J. Chanfrau, a Daytona Beach lawyer who frequently handles securities lawsuits, has begun preparing for a caseload explosion. He's shopping around for a high-speed photocopier.
"Each of these cases easily can require thousands of copies of documents," he said. "It's going to burn up our existing machine."
Chanfrau's firm plans to focus mostly on cases involving losses of at least $100,000 or more, he said.
Steven B. Spivey, an Ocala securities lawyer, is using a different method to choose cases. Instead of setting a dollar threshold for losses, Spivey is scouting for situations that involve misdeeds already documented in the New York settlement.
One example, Spivey said, would be Internet stock purchased through Merrill Lynch where analyst Henry M. Blodget touted such companies as GoTo.com and Homestore.com. Blodget, along with Saloman analyst Jack Grubman, have been banned from the securities business for life.
Meyer and Spivey suggest investors start compiling data on losses they've incurred since the bear market began three years ago. Assemble any notes, brokerage memos or research reports that might have influenced a decision to buy or sell, they said.
Another preliminary step, Chanfrau said, would be for an investor to contact his broker and inquire whether anyone at the firm has been subject to disciplinary action by regulators. If so, that may be a red flag that the investor's account has been mishandled.
"How do you know if you have a claim?" Meyer said. "Ask yourself, 'What were my investment objectives? Did my broker follow my objectives?' "
Meyer, a former stockbroker, said many investors have only themselves to blame for their losses. "Not everyone who lost money in the market is going to be entitled to restitution," he said.
However, a broker has a legal obligation to warn a client about investments that would be too risky for the client's particular circumstances, Meyer added. A retiree needing steady investment income each month should not be encouraged to make a big investment in a high-risk start-up firm, he said.
Investors will have to take the initiative to get any money at all, Chanfrau predicted. While Salomon Smith Barney (recently renamed CitiGroup Global Markets) has issued an apology to investors, other brokers are saying little to the public. None of them has mentioned reimbursing anyone voluntarily.
"People are not going to be receiving a letter from Wall Street saying, 'I messed up' " Chanfrau said.
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