Investors are filing increased numbers of arbitration claims against investment firms for investment misconduct and fraud relating to the sales of complex investment products. A common defense, according to a June 11 Wall Street Journal article, is the claim that the investors were sophisticated enough to understand the risks involved with their investments. Investors, particularly those who lost money in complex, risky collateralized-debt obligations (CDOs), say the investments were too complicated to be understood and that they should never have been sold to individual investors who lacked the knowledge to thoroughly understand the risks. Moreover, in most cases, the brokers who sold the investments didn't understand the risks involved with the investments. Michael Slomak is one such investor. According to the WSJ article, he recently filed a claim against Merrill Lynch alleging that the firm failed to adequately explain the risks associated with their CDOs. He and his family lost all but $16,500 of $2.65 million invested. Merrill Lynch has so far declined to provide a response, according to the article, but a spokesman has been quoted as saying that a "very small percentage" of investors who were sold Merrill-issued CDOs were individuals and that those individuals possessed above average wealth, thereby implying that the individuals could be classified as sophisticated investors. The FINRA arbitration panel will decide if the brokerage firm can escape responsibility based on its "sophisticated investor" defense.