Stockbrokers and financial advisors fail to live up to their professional duties in a variety of ways. In some cases, investor lawsuits and arbitration claims involve allegations of outright theft or forgery of documents.
In other cases, negligent brokers steer an investor’s money into risky, inappropriate (unsuitable) financial products in order to obtain higher commissions.
Our law firm handles all types of investment fraud and broker negligence claims. Some of the most common examples of cases that we see include:
Breach of Fiduciary Duty: Under the Investment Advisers Act of 1940, certain investment professionals, known as registered investment advisors (RIAs), owe fiduciary obligations to their customers. Your RIA must always look out for your best interests. If you lost money because of your RIA’s breach of fiduciary duty, you may be entitled to compensation for the full value of your damages.
Unsuitable Investments: Many financial advisors are not fiduciaries. Instead, they are held to the suitability standard. These stockbrokers and financial advisors can only sell and recommend financial products that are appropriate for a customer’s unique investment profile. If you lost money in unsuitable investments, you should consult with an attorney immediately.
Material Misrepresentations or Omissions: Brokers have a duty to make fair and honest representations to their clients. If they fail to do so, and an investor loses money due to a misrepresentation or a material omission, the broker may be liable for the investor’s losses.
Lack of Diversification: Brokers must also act with the appropriate level of professional skill. Pushing a customer into over-concentrated investments is highly risky. Brokers can be held liable for losses sustained because of an investor’s inappropriate lack of diversification.
Excessive Trading (Churning): Stockbrokers and financial advisors must have a well-grounded, reasonable basis to execute all trades. Unfortunately, there are cases in which brokers will frequently trade on a customer’s account, simply to increase their own fees. This unlawful practice is known as churning.
Unauthorized Trading: Brokers must have the proper legal authority to make transactions on behalf of a client. If you lost money because your broker made trades that you never approved of, you may have been the victim of unauthorized trading. You should consult with an experienced attorney.