How to Recover Losses Caused by Your Stockbroker or Financial Advisor
The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition FINRA operates an alternate dispute resolution division where aggrieved customers can pursue FINRA registered brokers and broker dealers for damages caused by negligence, misrepresentation or fraud.
The most common basis for investor cases that we see are:
- Unsuitable Investments– Brokers are charged with the duty to only make recommendations that are suitable for a customer taking into account their age, health, level of financial sophistication and investment profile. A common abuse is recommending high commission products that are risky to retirees or those planning on retiring in the near future. Failure to diversify is another type of unsuitability.
- Breach of Fiduciary Duty– Investment professionals owe a fiduciary duty to their customers charging them with a duty to look out for your best interest.
- Misrepresentation/Omission – Many investment professionals forget about their duty to advise of the bad as well as the good aspects of a particular investment product and only discuss the good stuff, failing to discuss the risks. There is a real conflict of interest a broker faces when making investment recommendations. Risky products like private placements, REITs and limited partnerships pay commissions at the high end of the scale so a broker may be tempted to make an investment sound better than it is in order to generate higher revenue for themselves.
- Churning– Excessively trading an account is another way brokers generate revenue by increasing the commissions charged.
- Unauthorized Trading– Unless you have specifically granted, in writing, authority for a broker to trade your account without first discussing it with you, there is a duty that each and every buy and sell be discussed with you and permission granted by you, prior to execution.
- Fraud– We have seen many kinds of it over the years. From documents forged by brokers to defeat the firm’s compliance department to fake statements and outright theft.
- Exploitation of the Elderly-Unfortunately this is an all too common abuse. Nursing home patients, surviving widows whose spouses handled the family financial matters and elderly individuals with diminished mental capacity are often targets for unscrupulous advisors.
FINRA arbitration is much quicker than court litigation and far less costly. In addition, we handle virtually all of our cases on a contingent fee basis, meaning you only pay from the proceeds of any recovery. We advance costs on many of the cases we handle.
Learn More on Our Websites
For more information on how the FINRA arbitration process works, visit our firm website at RexSecuritiesLaw.com. And of course, we encourage you to call.
Interested in learning about the disciplinary issues of a particular financial professional? Visit & search our Investors Recovery BLOG where we have information taken from the public regulatory records of many investment professionals.
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
Florida-561 391 1900