Investment Fraud Fought by Experienced Securities Lawyer Los Angeles
Helping clients get redress after investment fraud in California
Investment fraud often involves promises of low risk, high profit, and a quick turnaround. Our Los Angeles investment fraud lawyers have seen regular investors and even accomplished entrepreneurs be scammed by corrupt brokers or investment professionals offering such embellished statements to entice the unwary.
The Frankowski Firm helps investor clients find restitution after suffering from investment negligence and fraud. We work diligently on behalf of investors who have suffered financial losses because of the negligence or incompetence of their brokers or brokerage firms.
What does negligence entail?
The mainstay of negligence among investment brokerages has two threads. First, that the real and significant risk is somehow minimized and second, that the investment, regardless of associated risk, is suitable for a client. Every client is unique, and their investment needs vary widely in regards to risk tolerance, duration of investment, amount of anticipated return, and even the industry or field of the investment. A skillful investment firm will match each investor with appropriate choices based on individual needs. When these needs are downplayed or outright ignored, our California investment negligence lawyers are prepared to take legal action to gain restitution, particularly in the cases of:
- Mutual funds. As publicly traded investments managed by registered investment advisors and regulated by the SEC, mutual funds offer many advantages, particularly portfolio diversification and professional oversight. Nevertheless, they are not ideal for every investor, depending on his or her requirements and desires.
- Penny stocks. These low value and low liquidity stocks are considered high-risk investments. As such, they are rarely suitable to meet the goals of the typical investor, particularly without the specific guidance of a brokerage firm familiar with the needs of the investor.
- Buying on margin. The issues with this particular practice are that the investor is obliged to pay at least 50% of the purchase costs upfront, with the rest often borrowed from the broker. Anytime the broker’s fiscal well-being becomes embroiled in the personal finances of the investor, the situation is rife with potential for fraud or negligence.
- Private placement investments. As high-risk, unregistered investments, private placement investments usually entail master limited partnerships (MLPs) in the energy and natural resource sector, and Real Estate Investment Trusts (REITs). They are rarely appropriate for any investors except those who are comfortable with speculation and potential losses.
- Master limited partnerships. MLPs are tax-exempt energy infrastructure-oriented investments that have recently become extremely popular due to the US energy boom. But every boom precedes a bust, and MLPs are no exception. Since their fund flow requires ongoing infusions of cash, money is frequently borrowed through banks, which then charge fees. Past performance is no promise of future success, and MLPs are on the very cusp of the energy crisis bubble.
- REITs. Many investors automatically assume that any real estate investment is fiscally sound. However, Real Estate Investment Trusts often fail to disclose past performance, fees, taxations schedules, and redemption restrictions. This lack of transparency, coupled with most investors’ lack of knowledge regarding the risks involved with the product, can lead to significant financial losses for the investor.
- Closed end funds. The wide variety of investment strategies employed by closed end funds, when considered with the vague policies and automatic deduction of fees and expenses, make these funds difficult to successfully rely on.
- Variable annuities. As a mutual fund combined with a thin veneer of insurance, these funds are often touted as extremely profitable and low risk. When the mask is withdrawn, investors find they may be missing tax-deductions, paying excessively high fees, lacking in options and paying high underlying expense ratios.
- Unsuitable margin trading. When a brokerage or investment firm lends money to its clients in order to facilitate their investment, a serious conflict of interest arises. If the investment succeeds, the firm is repaid the loan plus interest. Should the investment fall, the investment firm still gets repaid, leaving the client’s funds further depleted because of the increased leverage in the investment.
There are, unfortunately, many other ways in which financial advisors can be neglectful or fraudulent in their duty to their clients. Whenever a broker or advisor loses sight of the client’s best interests in favor of personal or professional gain, The Frankowski Firm is here to pursue justice.
Securities lawyer Los Angeles guide clients through the process of pursuing justice
Most investment fraud schemes involve the promise of a high return in a short period of time with little-to-no risk of losing the initial capital. These should always be red flag warnings to an investor. No investment is risk free, and very few offer significant profits after a minimal duration. A wise professional can help steer you away from these dangers, but if you or a loved one has been prey to any Los Angeles investment fraud, call The Frankowski Firm at 888.741.7503 or complete our contact form to discuss your legal options.