INVESTING: When in Doubt, Sit and Talk

When in Doubt, Sit and Talk

The $220 billion securities industry hailed the decision. Eugene and Julia McMahon of Yonkers, N.Y., reviled it. In a ruling of vital concern to small investors everywhere, the U.S. Supreme Court last week came out in favor of arbitration over litigation as a means of settling disputes between stockbrokers and their clients.

The court's ruling involved a suit by the McMahons, who own a funeral home, against giant Shearson Lehman/American Express. Back in 1984 the McMahons charged that their Shearson broker had churned their brokerage accounts, meaning that a variety of trading transactions were conducted solely to increase the brokerage commissions....

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