One of the most widespread misunderstandings among individual investors is that to recover investment losses from a stockbroker or the broker-dealer for which he or she works, they must establish that they were purposefully deceived about their investments or otherwise defrauded. Financial professionals, such as stockbrokers, may commit intentional misconduct in a variety of ways, including churning, improper trading, misrepresentations or omissions, and selling away. Investors, on the other hand, may recover their investment losses from their financial advisors and the brokerage companies for which they work if they can demonstrate simple negligence.

An investor can hold a stockbroker – and the firm for which he works – accountable by demonstrating that the stockbroker’s recommended investments or investment strategy were too risky or aggressive for the investor based on his or her profile, and the investor suffered losses as a result. Such accusations may be based on inappropriate individual investments, an investor’s portfolio being unduly concentrated in specific assets or a sector of the stock market, an overly aggressive asset allocation, or an improper investing method, such as trading on leverage.

When Can Your Brokerage Company Be Held Accountable?

Your financial adviser may not be exclusively liable for your investment losses. Your brokerage firm may also be held legally liable for its actions and/or negligence. For example, brokerage companies may be held legally accountable for their own carelessness.

In certain circumstances, the brokerage firm’s carelessness will be a significant element in allowing an individual financial adviser to conduct fraud.

If a brokerage business does not have a sufficient supervision system in place, the corporation may be held accountable for any wrongdoing performed by its financial advisers that might have been discovered and avoided if the right rules were in place.

Furthermore, brokerage companies are often held accountable for the carelessness of their individual financial advisers under Section 20(a) of the Securities and Exchange Act.

This part of the legislation contains the Control Person Liability standard.

Essentially, the law holds brokerage firms accountable for their representatives’ misbehavior unless the business operated in good faith and did not indirectly incite the misconduct.

Applying the Control Person Liability criterion in real-world situations may be exceedingly difficult.

As a result, before filing a claim, you should speak with an experienced legal counsel. We can help you with that!

When Can Your Financial Advisor Be Held Accountable?

Fiduciary obligations are owed by financial advisers (stockbrokers, brokerage firms, and so on) to their customers.

A fiduciary obligation is the highest level of care. As a fiduciary, your financial adviser is responsible for:

• Take actions that are in your best interests;
• Place your interests before of theirs; and
• Execute professional responsibilities with expertise and attention.

If a financial adviser fails to fulfill their fiduciary obligations for whatever reason, they are negligent.

When a financial adviser’s carelessness leads (in some way) to an investor’s monetary losses, the advisor may be held legally accountable for the damages.

Negligence manifests itself in a variety of ways in the financial industry. Offering improper financial suggestions, unlawful trading, churning, or over-concentration of assets are all examples of unethical behavior.

Contact Our Brokerage Firm Fraud Lawyers Right Away!

We are proud to be advocates for investors throughout the United States.

We can assist you in holding the relevant parties legally accountable for your investment losses if you lost money due to a negligent financial adviser or a negligent brokerage business.

The bottom line:

If you lost a considerable amount of money as a result of your financial advisor’s fraudulent or irresponsible activities, you may be able to file a legal claim against them. Do not hesitate to contact our firm no-cost consultation regarding your potential claim.