Updated: April 2025
Rex Securities Law-North Dakota Stockbroker Malpractice Investment Fraud Attorney
After spending 4 years in the U. S. Air Force, Robert Rex, Esq. obtained his bachelor’s degree in accounting and then graduated from law school, joining the bar associations of Florida and Texas. He practiced as a Certified Public Accountant for six years specializing in tax law with two national public accounting firms.
After a couple of years as in house counsel for an oil and gas exploration company, he commenced his law career and soon discovered that his background in accounting was great preparation for focusing his law practice on the representation of victims of stockbroker malpractice and securities fraud.
In the 1990’s his first investment loss recovery case was the representation of an elderly widow who came into the office because thought something was not right about her investment account. Working with an older lawyer who was one of the leaders in the field of investment loss recovery at the time, after a year of trial preparation and several weeks of arbitration hearings, an arbitration panel awarded $2 million dollars, much to the delight of their client.
Since that time Mr. Rex has represented hundreds of victims of stockbroker malpractice, investment fraud and theft. We understand that losing a substantial amount of your nest egg, especially for the retired and those hoping to be retired is a serious matter.
Our practice is limited to the representation of victims of securities fraud and stockbroker malpractice. We represent clients nationwide and worldwide for victims who have accounts with U. S. registered brokerage firms.
In most cases representation is handled on a contingent fee basis and we do not charge to evaluate a case.
Discuss your case with experienced investment fraud lawyer Bob Rex at (877) 224-3199 for a free consultation.
The Most Common Types of Securities Fraud & Stockbroker Malpractice
- Unsuitable Investments– Suitability is the most common form of abuse we see.One size does not fit all when it comes to investment recommendations. What may be suitable for a 30-year-old with a high income and a finance background is not suitable for a 75-year-old retiree living on social security and income from a 401K nest egg. The former can afford to take risks that the latter cannot. Brokers have a duty to make recommendations suitable considering the customer’s age, health and level of financial sophistication. See this for our prior investigations involving Unsuitable Investments.
- Churning-Excessive trading (buying/selling) for the purpose of generating commissions is a common abuse. If you are receiving lots of trade confirmations or if your statements are many pages long, you might be a victim of churning. What is Churning?
- Unauthorized Trading-Unless you have granted, in writing, permission for the broker to trade your account without first consulting you on each trade, the broker is required to obtain your permission prior to any purchase or sale in your account. What is Unauthorized Trading?
- Overconcentration-We are all familiar with the saying: “Don’t put all your eggs in one basket” Unfortunately, some stockbrokers are not familiar with the adage. More likely, due to the commissions which can be earned on high commission paying products such as REITs and other alternative investments, the broker violates the adage and puts too high a percentage of the account in a single stock, limited partnership, private placement or other alternative investment, often leading to large losses. See this for our prior investigations involving Overconcentration issues.
- Misrepresentations and Omissions-While a broker is obligated to provide you with all the facts related to a particular investment, both the good and the bad, as a practical matter, that does not always happen. It is not uncommon for the broker to tell you what he knows you want to hear, “This investment will provide a steady and dependable income stream, kind of like a bond, and an opportunity for some capital gains, 5 or 6 years down the road”, leaving out all the risks associated with the investment. See this for our prior investigations involving Misrepresentations and Omissions.
- Theft-Despite the many steps taken by firms to prevent misappropriation from customer accounts, the unscrupulous broker can still find a way to steal. We have seen it a number of times over the years, including cases where the broker creates fake statements and directs the authentic firm=prepared statements to an address he controls, where he receives and destroys them. See this for our prior investigations involving Theft.
Stockbroker malpractice and securities fraud takes many forms including improper use of margin borrowing, providing inaccurate and misleading broker prepared account summaries, elder financial abuse , breach of fiduciary duty, failure to supervise, breach of contract, negligence, failure to provide prospectus, investment guarantees, unlicensed broker, lack of due diligence, pressure sales tactics, cold calling to gain trust, affinity fraud, Ponzi schemes, pump and dump penny stocks, “I put my Mom in this stock” and selling away.
Securities Regulators in North Dakota and Nationwide
The primary role of state and federal securities regulators is to enforce laws regarding securities transactions to ensure truth and fairness and to deter misconduct. The regulators may bring disciplinary and/or criminal action against those violating the securities laws but they do not assist the aggrieved investor with recovery of money.
You will need to hire a lawyer to successfully pursue recovery of losses. We suggest that you hire a lawyer who specializes in this esoteric area of the law, and we suggest that you seek advice regarding your situation before filing a complaint with any regulator.
Why? We say this because we have seen situations where a victim files a regulatory complaint and the regulator is either not interested in the cause or fails to do a thorough job of investigating the matter, leading to a dismissal of the complaint. Remember these regulators are government agencies which are often understaffed, overworked and have no real incentive to prevail.
Should your regulatory claim be dismissed as a result of a cursory review you will create a hurdle you have to later overcome when it is presented as a defense by the brokerage firm. Since regulators aren’t charged with advocating recovery for you, even if they prosecute your claim, they don’t recover money for you and you will still have to hire a lawyer. That is why we advise against filing a regulatory claim prior to pursuing your case in FINRA arbitration.
North Dakota Securities Department – According to their website: “The North Dakota Securities Department protects investors and supports legitimate capital formation. The Department is a regulatory agency responsible for the administration of the North Dakota Securities Act (10-04), the North Dakota Commodities Act (51-23), the Franchise Investment Law (51-19) and Pre-Need Funeral Services Law (43-10.1) .
The Department regulates investment industry firms and professionals and also regulates capital formation involving the offer and sale of securities. We strive to adequately balance the support of efficient, legitimate capital formation with appropriate protections for investors who commit capital to businesses.
The investigation of investment fraud and other securities law violations is also our responsibility, and we may take enforcement actions that result in disciplinary remedies and act as a deterrent for further violations.
Through our investor education programs and resources, we strive to help North Dakotans make informed investment decisions, avoid fraud and build financial security.”
U.S. Securities & Exchange Commission (SEC) – According to their website: “The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public’s trust.”
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, brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.
See below for more on FINRA arbitration, which is how virtually all disputes between customers and stockbrokers are resolved.
The North American Securities Administrators Association (NASAA)-According to their website: “The North American Securities Administrators Association (NASAA) represents state and provincial securities regulators in the United States, Canada and Mexico.
NASAA members are the closest regulators to local communities, small businesses and the investing public throughout North America. Members of NASAA have a multifaceted mission of protecting investors from fraud and abuse, conducting investor education, providing guidance and assistance via the established regulatory framework, and ultimately helping power the North American economy by ensuring the integrity of the financial markets.”
FINRA Arbitration
Likely unbeknownst to you at the time, when you opened your brokerage account, contained in the fine print on the account opening documents is a clause whereby you agreed to waive your right to go to court and agreed that any dispute would be resolved utilizing the FINRA Dispute Resolution Services.
FINRA arbitration is generally much quicker and less costly than court litigation. Cases are typically resolved in 12-18 months compared to the several years or more it may take for a commercial case to be resolved in court.
Depending on the circumstances in your case we may advance some or all the costs.
Recover Your Investment Losses Now With Rex Securities Law
If you have suffered investment losses in your brokerage account, contact us for a complimentary consultation with an experience securities lawyer to learn how you may be able to recover damages through FINRA arbitration.
With offices in Boca Raton, FL and Austin, TX, stockbroker fraud attorney Bob Rex provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers, financial advisors, and broker dealers.
Representing clients in North Dakota including Fargo, Bismarck, Grand Forks, Minot, West Fargo, Williston, Dickinson, Mandan, Jamestown, Wahpeton, Devils Lake, and Valley City.
If you have questions about how your account has been handled, call (877) 224-3199 to speak with an experienced securities attorney at no cost to you.
Most cases are handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
Duty to Supervise- FINRA Rule 2090 – Know Your Customer
Per FINRA-“ Every member shall use reasonable diligence, in regard to the opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.”
Often referred to as the Suitability Rule, this rule mandates that a broker take into account the customer’s age, health, financial resources and level of financial sophistication when making investment recommendations. There is a duty to only make recommendations that are ‘suitable’ for that customer.
An Extreme Example of Suitability: What is suitable for 50 year old executive with a finance background is not suitable for the 83 year old widow with no financial experience, limited net worth and living on social security.
The SEC Regulation Best Interest Rule
Per the U.S. Securities and Exchange Commission, the Best Interest Rule applies when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.
The Best Interest Rule requires “When making such a recommendation to a retail customer, you must act in the best interest of the retail customer at the time the recommendation is made, without placing your financial or other interest ahead of the retail customer’s interests.”
- This obligation requires four specified component obligations, one of which is compliance and mandates the broker dealer to establish, maintain and enforce written policies and procedures reasonably designed to achieve compliance with Regulation Best Interest.
Failure to Supervise Results in Losses in Customer Accounts & An Example of Suitability
FINRA requires Broker-Dealers to establish reasonable written procedures to supervise the activities of its financial advisors (registered representatives), designed to achieve compliance with securities laws and regulations.
The broker who trades excessively (churning) in order to generate commissions can lead to a failure to supervise claim against the broker-dealer since they apparently did not monitor the amount of trading the broker was doing and compare it to the risk tolerance and investment objectives of the customer. An effective supervisory system will have thresholds which are triggered to send a red flag warning should established parameters be violated. This will then trigger a review of the account by compliance to compare the broker’s trading to the investment objectives and suitability standards for that particular customer. Unfortunately, there are broker-dealers who are either negligent and failed to follow up on these red flags, or purposely ignoring the red flags in order to generate revenue.
This same lack of follow through can result in accounts being overly concentrated with a single stock or too large of percentage of the account invested in Alternative Investments. The latter, over concentrating an account with alternative investments (ie: real estate investment trusts (REITS) , oil and gas partnerships, and private placements is a common and popular abuse.
Alternative Investments: These are assets that are not stocks, bonds or cash. Alternative investments generally fall within five categories: hedge funds, private capital, natural resources (oil and gas, energy), real estate (REITs) and infrastructure. They are typically less liquid that conventional investments, less regulated with higher fees and generally higher risk.
Recover Your Investment Losses Now With Rex Securities Law
If you have suffered investment losses in an account handled by a financial advisor contact us for a complimentary consultation with an experienced securities lawyer to learn how you may be able to recover damages through FINRA arbitration.
With offices in Boca Raton, FL and Austin, TX, stockbroker fraud attorney Bob Rex provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers, financial advisors, and broker dealers.
If you have questions about how your account has been handled, call (877) 224-3199 to speak with an experienced securities attorney at no cost to you.
Most cases are handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.