Tennessee Investment Fraud Attorneys Protect Your Rights
Making sound investment decisions should not be a guessing game for Nashville investors
Investing is the very definition of risk. Every investor has his or her own personal level of comfort with the preferred duration of an investment, the level of acceptable risk, the amount of information provided upfront, the tax implications and even the commission schedule for the involved broker. As a result, not every type of investment or fund is right for every client, and a strong and seasoned investment professional will balance the wishes of the client with the realities of the market.
When a broker or firm disregards these best practices, not only can clients lose money, but they can also be inviting a lawsuit for fraud or negligence. In these types of circumstances, the Tennessee investment issues attorneys at The Frankowski Firm work for investors in Nashville and across the state.
Investment fraud and negligence as unacceptable risk to investors
For most, the concept of investment fraud and negligence brings to mind images of shady backroom deals, outright lies and illicit trading. More often, however, investor’s needs and risk tolerance are simply disregarded, either willfully or through incompetence, leading to investment brokers pushing inappropriate investments on clients, resulting in financial losses.
When brokers disregard suitability, our Tennessee investment negligence lawyers are here to assist clients who have been misled into investments such as:
- Buying on margin. In this situation, the brokerage firm acts as a lender to allow the client to make a specific type of investment. Because the firm stands to make a greater profit from the client’s default than on the client’s successful investment, the conflict of interest is usually unsuitable for most investors.
- Closed end funds. Closed end funds combine the traits of an IPO and a common stock share. However, due to the high amount of leverage involved, as well as the risks to liquidity and credit, and overall volatility, these are rarely suitable for any but the most risk-comfortable investors.
- Master limited partnerships (MLPs). These investments are primarily involved in energy and gas infrastructures. They tend to be a favorite of avaricious brokers because of the commensurately high commissions, despite the high risks to investors.
- Mutual funds. These publicly traded, professionally overseen and regulated funds have generally been seen as appropriate for most investors. Part of their appeal is the ease of generating portfolio diversification through the acquisition of mutual funds. There are still risks involved, as with any investment, and may not be suitable for every investor.
- Penny stocks. These inexpensive stocks are less regulated than other stocks, which is a risk in and of itself. Furthermore, business stocks valued in pennies are often inevitably heading towards bankruptcy, and thus have a much higher than average risk, which not every investor will be comfortable with.
- Private placement investments (PPIs). These investments are exempt from oversight by the Securities Exchange Commission (SEC). The most common types of fraud and negligence surrounding PPIs involve lack of full disclosure of past performance, issuer and management. For new or conservative investors, it is never advised to make financial investments in funds without a clear performance track record.
- Non-Traded Real Estate Investment Trusts (REITs). While real estate investing itself it usually a secure choice, non-traded REITs are anything but. They are associated with losses due to their non-disclosure of risks, past performance or profitability, tax classification and penalties for early withdrawal. The resultant fees, minimal profits and unexpected tax obligations make them a high-risk investment option.
- Variable annuities. One of the most common types of investment fraud is variable annuity investment. This is due to their exorbitant fees, minimal tax benefits and inflated commissions owed to brokers prior to realizing any potential profits.
Turn to Tennessee investment issues attorneys for help today
Every day, new schemes and strategies are devised to part unwary and good-willed investors from their hard-earned money. As such, this list isn’t a comprehensive guide, but an overview of the most common complaints our clients bring to us. If you or a loved one has lost money due to the misconduct or negligence of a Tennessee investment broker or investment firm, call The Frankowski Firm at 888.741.7503 or fill out our contact form to discuss your legal options.