When you invest your hard-earned money, you probably do so because you want to protect yourself in the future. Whether you are planning for your retirement, for a major purchase (like a home), for your children’s educational opportunities or are simply investing for fun, the goal is to make money, not lose it. But what happens if you lose everything? Can you sue your financial advisor or your broker to recoup those losses?
The short answer is “yes,” but only if those losses are the result of wrongful acts by your advisor, broker or investment firm. If the person you trusted with your money acts unethically, commits an act of securities fraud, or behaves in a negligent manner, you may be entitled to pursue damages through a lawsuit or through FINRA arbitration.
Broker negligence, securities fraud and the loss of your investments
Losing money in the stock market is not always a case of negligence or securities fraud; fluctuations in the market itself can cost you your investment, as can global events that were impossible to anticipate. However, if your stockbroker or financial advisor failed to protect your interests, or to live up to his or her obligations, then you could have a reason to sue your stockbroker for negligence.
The most common forms of stockbroker negligence and fraud include:
- Failing to diversify your portfolio, or overconcentrating your stock purchases (in one industry, or in one type of security)
- Churning accounts in order to generate excessive commissions
- Failing to do his or her due diligence into which types of securities are suitable to your needs, or ignoring what is suitable altogether
- Selling securities that are not held or offered by the investment firm
- Branch managers failing to appropriately supervise brokers’ work, or to monitor clients’ accounts for suspicious activity
- Selling off fake securities or products, an egregious form of fraud
- Promising quick returns on investments that are solely based on the investment of other people – AKA, Ponzi schemes
- Failing to put the clients’ best interests first, thereby breaching fiduciary duty to those clients
Filing a lawsuit against your broker, advisor or investment firm
If you have a viable claim for negligence or fraud, you can file a lawsuit against your broker, your advisor, or the firm for which he/she/they work. Before you file, however, you must review the contract you signed when you first became a client. Many investment firms mandate that investors seek damages through arbitration. If your contract contains such a clause, you will not be able to file a lawsuit in court but must file a Statement of Claim in arbitration.
Suing your stockbroker, financial advisor or investment firm is a complex process; you want a skilled team of securities fraud attorneys on your side to help you. The Frankowski Firm has the resources and experience to handle complex litigation in state and federal courts, as well as in front of a FINRA arbitration panel. Please contact us through our contact form, or call 888.741.7503, and speak with an investment negligence lawyer who can help you.