June 23, 2005

New law clinic protects small investor

By Pat Tremmel

The stock market — throughout the dramatic highs and lows of the 1990s and the uncertainties of a 9/11 world — continues to attract an unprecedented and previously unimagined array of investors. A number of them are small investors with big problems with their securities transactions.

The new Investor Protection Center at Northwestern University School of Law’s Bluhm Legal Clinic, through funding from the NASD Investor Education Foundation, will address the legal needs of such investors in the Chicago area. The center will offer private representation to people with insufficient income or small claims, typically under $100,000, in resolving securities claims through arbitration.

At the same time, the Investor Protection Center will give Northwestern law and business students opportunities to work with clients on sophisticated legal problems. In the process, the center also is documenting its operations to provide a much-needed model for other schools of how to start such clinics.

“It’s a win-win situation for all involved,” said J. Samuel Tenenbaum, an experienced litigator and the director of the Bluhm Legal Clinic’s Investor Protection Center.

“Small investors will get services that are not readily available, if available at all, in the Midwest,” he said. “Students will get invaluable experience interviewing and counseling clients, explaining the arbitration and mediation process, investigating and selecting potential arbitrators, conducting discovery, negotiation settlements and participating in mediations and arbitrations. Regulators, including NASD and the SEC, as well as brokerage houses will get a screening mechanism to determine legitimate claims.”

The opening of the center follows an initiative by New York Attorney General Eliot Spitzer that resulted in the creation of nine investor protection clinics at law schools on the east coast.