Investment or Securities Claims
Stockbrokers, registered investment advisers and financial planners are required to deal with their clients with the utmost integrity. They are not permitted to place their own interests ahead of their clients. This duty is called a fiduciary duty because they are in a position of trust. If the stockbroker or investment adviser breaches that fiduciary duty and causes you injury, you may have a stock fraud claim and may be able to recover damages for any losses caused by the stockbroker's misconduct.
The federal and state securities laws protect investors from material misstatements of fact as well as the failure to disclose a material fact in connection with the purchase or sale of securities. In addition to misstatements and omissions in connection with the purchase or sale of a
security, there are a number of other types of securities fraud claims including the following:
Unsuitability
When your broker recommends an investment, it must be in your best interest
and align with your financial goals. The National Association of Securities Dealers (NASD) has established certain standards under the "know your customer" rule. This means it is the broker's responsibility to consider your financial condition, comfortable risk level and investment goals to determine what securities are best suited for you. However, there is little incentive for your broker to conduct this research,
and often times this essential step is incomplete. If you broker does not learn anything about your financial objectives, he or she cannot fulfill this responsibility. Your broker might then make recommendations to satisfy his or her own benefit; basing trades on the commissions each produces.
Churning
Although mot as common as in the past, "churning" occurs when your investment advisor authorizes, or you stockbroker performs as series of trades that produce fees for the advisor and broker while putting your money at risk. Unauthorized trading violates industry regulations and can be the basis for a claim against the broker and the stockbroker's firm.
Breach of Fiduciary Duty
The relationship between you and your stockbroker is a fiduciary relationship if you look to your broker for advice, and he or she is aware of that responsibility and accepts it. When this type of relationship is
present, your stockbroker is required to exercise loyalty, good faith and care toward you. If your broker violates that trust and you incur losses, he or she may be held liable. To have valid claim for breach of fiduciary duty, you broker must have
discretionary authority to manage your account. You give him authority when
you open your account, along with information about your tax needs, risk
preferences and financial goals. From this information, your broker creates your investor portfolio and becomes legally obligated to make good investment decisions on your behalf.
Unauthorized Trading
Unauthorized trading happens when your broker engages in buying and selling that does not fit the needs outlined in your portfolio. A common strategy that deceitful brokers use is to buy securities for your account and when you call them to complain, they tell you the securities have increased in value, and you should keep them. Another tactic is to blame the unauthorized trade on a "computer or administrative error." Be aware of this excuse, because it could indicate a dishonest broker.
In today's economic climate it appears there is an increase in possible shady dealings, so if you feel like you have had an excessive loss or possible misconduct by your broker or investment advisor, please contact us today to discuss a investment or securities claim.
