Modern financial products can be complex and complicated. There are a vast number of investments available, which can make it more confusing for individual investors. Stockbrokers and brokerage firms sometimes provide much-needed advice and recommendations. Investors put a lot of trust in the stockbrokers and brokerage firms they choose to work with and it is not unreasonable to expect that they will handle your hard-earned savings in a manner that is in the investors’ best interests. Stockbrokers and brokerage firms are required to handle their clients’ accounts responsibly and only to make recommendations that are suitable for each investor individually.
When stockbrokers and brokerage firms make recommendations that are not suitable, it can result in the investor suffering significant investment losses. Stockbrokers and brokerage firms that make unsuitable recommendations may be held accountable for any resulting losses. If you suffered losses investing with a stockbroker and brokerage firm, then you may be entitled to recover some of those losses.
Galvin Legal, PLLC’s stockbroker fraud attorney, James P. Galvin, is committed to serving investors who have suffered investment losses as a result of unsuitable and/or fraudulent recommendation by their stockbroker and brokerage firm. Mr. Galvin’s financial and securities industry background gives him a unique and valuable perspective in evaluating potential securities fraud claims and in understanding how brokerage firms typically defend fraud cases. If you suffered investment losses as a result of your stockbroker’s recommendation and would like a free consultation with a stockbroker fraud attorney, then please contact Galvin Legal today.
Typical Stockbroker Fraud Claims
It can be difficult to determine whether investment losses are a result of stockbroker fraud, negligence, or other types of bad behavior, or whether the losses are simply due to normal market fluctuations. If you have suffered investment losses and are considering filing a stockbroker fraud claim, it is important to thoroughly analyze your claim to determine whether you have a potential claim for which you may recover. Common types of disputes include:
- Breach of Fiduciary Duty: The legal obligation that advisors act in the best interests of clients is known as a “fiduciary duty.” A claim for breach of fiduciary duty contends that the advisor’s actions were not careful or loyal to his or her client, and therefore, not in the client’s best interest. Firms are required to research every security it offers to ensure that it is a sound investment and that it is suitable for the firm’s client base. This is required to enable firms to maintain control of the products offered by their representatives and to properly supervise what products are being recommended to the firm’s clients. Firms are required to supervise their advisors and can be held responsible for investor losses as a result of their failure to supervise when advisors breach their fiduciary duty to clients.
- Misrepresentation or Omission of Facts: Brokers are prohibited from omitting material facts, making misrepresentations, and other types of securities fraud. Even if it was an honest mistake, it does not excuse the fact that it caused you to lose money. You may be entitled to recovery of your losses whether they were the result of mistake or fraud.
- Unsuitable Investment Recommendations: Under FINRA Rule 2111, financial advisors and brokerage firms are required to have a reasonable basis to believe that any investment recommendations are suitable for their customers. If a broker recommends an unsuitable investment to an individual, then that person may be subjected to unnecessary risk and suffer losses.
- Failure to Diversify Investment Portfolio: “Don’t put all your eggs in one basket” is a common adage and describes the concept of diversification, and nowhere is it more applicable than in the world of investing. FINRA Rule 2111 requires brokers to recommend investments that are designed to suit the investor’s unique investment objectives and risk tolerance. In addition to the requirement that brokers only recommend portfolios designed to meet the unique investment objectives and risk tolerance of the individual investor, brokers are required to recommend investments that provide adequate diversification in their overall portfolios.
- Excessive Trading: Churning or excessive trading occurs when a broker engages in excessive trading of securities in a customer’s account with the primary purpose of generating commissions. Brokers and brokerage should only recommend or execute securities transaction as part of a broader investment strategy. If a broker is trading for no other reason than to generate fees or commission payments, then they are engaged in churning, a clear violation of securities industry rules.
Contact Our Stockbroker Fraud Attorney Today
If you have suffered investment losses and would like a free consultation with a stockbroker fraud attorney, then please call Galvin Legal today.
Galvin Legal is a national securities arbitration, mediation, and investor protection law practice.