Combating Financial Losses: Unveiling Common Investment Misconduct
Safeguarding your hard-earned investments is paramount, and at Meyer Wilson, we are committed to helping investors who have fallen victim to investment misconduct. Our experienced attorneys specialize in securities arbitration matters, providing compassionate legal representation to protect your financial future.
Navigating Common Investment Pitfalls
Inappropriate Recommendations
Brokers and advisers have a primary responsibility to thoroughly understand your financial situation, investment goals, future needs, age, investment experience, and risk tolerance. They must continuously reevaluate and ensure their recommendations align with your best interests.
Breach of Fiduciary Duty
Investors often place their trust and confidence in financial professionals, relying on their expertise and knowledge. However, brokers and firms can be held accountable for abusing this trust in what is called a breach of fiduciary duty.
Churning and Reverse Churning
Churning occurs when a broker excessively buys and sells securities in an investor’s account solely to generate commissions. If you have experienced excessive trading activity and suffered damages, you may have grounds for legal action.
Conversely, reverse churning occurs when an investor is charged an ongoing advisory fee for an account with little to no transactions. For this type of stagnant account, paying an ongoing advisory fee is not in the investor’s best interest.
Negligence
Negligence is any conduct that falls below the standard of care that a reasonable, prudent person would have exercised in the same situation. Financial professionals owe investors a heightened standard of care, including due diligence and operating in good faith. Failure to meet this standard can result in significant losses for investors.
Unsuitability
The Financial Industry Regulatory Authority (FINRA) enforces regulations requiring brokers to ensure all investments made on behalf of a client align with their best interests. If a broker makes investment decisions that are not in the client’s best interest, given the client’s situation and desires, they could be liable for financial losses. Unsuitability claims can help recover losses from unsuitable investments.
Fraud or Theft
Fraud or outright theft by a financial professional is a blatant unlawful tactic that needs addressed immediately. Exercise caution and thoroughly check the credentials of any financial professional you seek assistance from to ensure you’re less likely to be caught in a trap.
Failure to Supervise
Brokerage and advisory firms must diligently supervise their agents and clients’ accounts. If firms fail to properly supervise, and investment misconduct and losses result, they may be held liable. This includes instances like fraud or theft when the broker should have had someone overseeing their behavior and ensuring it is appropriate. Failure to supervise is more common than individual investors often realize.
Unauthorized Trading
Unauthorized trades occur when your stockbroker makes trades on your account without your authorization. Your broker must obtain your permission before buying or selling securities in your account. Even if your broker had good intentions, unauthorized trading is not allowed and can lead to legal action.
Registration Violations
Brokers and brokerage firms must be registered to sell securities in your state, and the securities themselves must be registered or properly exempt. The sale of unregistered and non-exempt securities violates state and federal laws.
What if my Broker is Engaging in Misconduct?
If you believe you have suffered losses due to investment misconduct, do not hesitate to contact Meyer Wilson at 866-938-2021 or visit meyerwilson.com. Our dedicated team is here to help you recover your losses and protect your financial future. We provide all case consultations for free, and all of our legal representation is done on a contingency fee basis.
