Securities Fraud Lawyer
To know if you need the expertise of a securities fraud lawyer, at the beginning of a relationship with a stockbroker or financial advisor (“Financial Professional”), or investment counselor he or she has an obligation to learn your investment objectives and risk parameters. This process may further include being asked to rank your objectives from a list along the lines of the following:
- Safety of principle/conservative
- Moderately conservative
- Moderately aggressive
These are general categories and you may be in two or more categories at any one time. For example, you may have 50% of your portfolio in conservative investments, 30% in moderately conservative investments and 20% in aggressive investments. Moreover, your objectives may change over time. Your Financial Professional has an obligation to memorialize these categories and any changes; so that all investment recommendations are suitable at the time they are made. Your Financial Professional must seek an understanding of the customer, including: investment experience and sophistication, income and its sources, need for funds in the present and future, level of acceptable risk, and other factors which define your investment suitability.
Once the Financial Professional understands your objectives, an investment strategy for some or all of your portfolio should be established. In making various recommendations, the Financial Professional must properly describe and not understate the risks associated with the suggested categories and particular investments.
Your portfolio should be reviewed from time to time to ensure the respective investments are performing as intended and adjusted when it appears that an investment is not meeting expectations. But keep in mind that while a financial professional must have a reasonable basis to recommend the purchase, sale or exchange of a security, they do not have an obligation to recommend that you sell an investment. In a non-discretionary account, you are responsible for deciding when to sell, even if from time to time your financial professional makes such recommendations.
The broker may fail to make appropriate recommendations because he or she has not learned the essential facts about a customer or not understood and the nature and risks of a recommended investment; thereby misrepresenting such risks. A Financial Professional may make unsuitable investment recommendations for a variety of reasons, among these are: selling you a particular investment for a greater commission, selling one security to buy another security simply to earn two commissions or generating commissions from excessive transactions which provide little to no benefit to the customer.
Such excessive trading or “churning” involves the following:
- Excessive trading;
- Where the Financial Professional has “legal” control of our account;
- For the purpose of generating commissions with little or not benefit to you.
While churning is subject to interpretation in each instance, there are guidelines set forth by federal, state and industry regulators, enforcement actions and other authoritative sources which help establish whether your account has been churned. Other factors which must be considered include: management supervision and the Financial Professional record of complaints and/or disciplinary history.
Since the issues which must be taken into consideration to determine unsuitable trading are complex, you want a securities arbitration lawyer with decades of experience as a regulator, in-house and outside counsel, general counsel and as a private practitioner, who has tried over 125 securities arbitration proceedings.
Getting Legal Help for Stock Broker Wrongdoing
It is important to understand that appropriate recommendations are in no way a guarantee against losses. Losses can be caused by negative information relating to a particular company, industry or the general direction of the market. Remember, in a non-discretionary account, the Financial Professional has no obligation to recommend the sale of a security. That means if you become uncomfortable with one or more of the securities in your portfolio, you should instruct your broker to sell. If your Financial Professional convinces you to hold investment(s) it will not in any way transfer the responsibility from losses away for you.
To learn more and to find out if you have a valid case, contact the Boca Raton, Florida, law office of attorney Todd A. Zuckerbrod, P.A., a securities lawyer, Florida, with a level of experience which encompasses all aspects of suitability. There is no charge for the initial consultation. Because of “eligible” time limits to file your claim, you should not delay; make the call as soon as you suspect fraud, excessive trading, or inappropriate risk-taking by your broker.