You worked hard, opened a brokerage or retirement account, and invested your savings with a financial advisor or stockbroker, only to suffer financial losses due to bad investment advice, misleading sales pitches, or brokers that were driven by commissions. Now what?
Can I Sue My Financial Advisor Over Losses?
Yes, you can sue your financial advisor or broker to recover investment losses if the broker did not have your best interest in mind when they made an investment recommendation or offered investment advice. You can also sue your financial advisor or broker if the financial advisor misrepresented or omitted material facts that an investor should have known about the security or investment strategy.
However, the dispute likely will not be litigated in a court of law. Instead, it will be contested in arbitration.
What is Securities Arbitration?
When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated. Arbitration, an alternative dispute resolution process, is the primary forum for resolving disputes between investors and brokerage firms because the client agreement, which the customer signs at account opening, contains a mandatory arbitration clause. To read more about securities arbitration, click here.
Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.
Can You Sue Someone for a Bad Investment?
The short answer is “yes” if your advisor did not act in your best interest connected with an investment-related recommendation.
When a broker-dealer makes an investment recommendation, or a registered investment adviser provides investment advice, the investor is entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that is in the best interest of the investor, and that does not place the interest of the financial professional or financial institution ahead of the interests of the retail investors.
The “best interest” standard is not limited to “recommendations” to purchase a security. It also applies to recommendations to sell or hold a security. Additionally, it applies to recommendations to purchase, sell, or hold an investment strategy. Finally, the “best interest” standard also explicitly applies to recommendations of types of accounts, including brokerage accounts and investment advisory accounts.
What is Excessive Trading or Churning?
Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer, but to generate commissions for the broker.
Churning is a more egregious variation of excessive trading. Churning refers to a situation where the broker executed an excessive number of trades and did so with the intent to defraud or reckless disregard for the customer’s interest. Churning is an unethical and illegal practice. It is also a violation of securities rules and regulations and can cause enormous harm to customers.
Excessive trading and churning are unethical and illegal practices. They are also violations of securities rules and regulations and can cause enormous harm to customers.
How Do I Sue an Investment Firm?
Brokerage firms must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.
If you believe you have a claim, you should contact experienced securities arbitration attorneys at Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.
How Much Do Securities Arbitration Attorneys Charge?
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue individual FINRA arbitration claims nationwide on behalf of investors to recover financial losses from brokerage firms’ wrongful conduct.
Iorio Altamirano LLP generally represents investors through a contingency fee arrangement, which means that if we do not obtain a recovery, we do not collect a fee*.
*We do not collect a fee unless we obtain a recovery via settlement or judgment. You may, however, be responsible for costs and expenses the firm has advanced according to the terms of your agreement with the firm. The firm may recover advanced costs and expenses by deducting the expense from the gross recovery of any settlement or judgment.