This is the definitive guide to understand the types of investment frauds that are most common in 2021. Investment fraud is a real and serious problem, and it happens more than you realize.
Continue ReadingSecurities fraud, which can also be referred to as investment fraud or stock fraud, is the deceptive practice by an individual or group in the securities markets that typically involves a victim (an investor) losing investment capital due to false or misleading information perpetuated by the perpetrator (the fraudster). If you’ve been the victim of securities fraud, you may be able to take legal action. Almost anyone can be a victim of securities fraud. While the elderly and inexperienced investors are frequent targets, even savvy investors can fall prey to securities fraud if they’re not careful. Perpetrators of securities fraud will often make false or misleading statements in order to persuade investors to buy or sell securities, usually at the benefit of the perpetrator. If you believe you have been a victim of securities fraud, it is important to take action. Securities fraud is an illegal or unethical activity punishable by law. You may be able to recover your losses by filing a lawsuit against the person or entity who committed the fraud, as well as protect yourself and other investors from future harm. You should consider talking with an investment fraud lawyer to learn more about your legal options. Key Takeaways Securities Fraud is an illegal and deceptive practice targeting investors to make investment decisions based on false or misleading information. There are many different perpetrators of securities fraud, and almost anyone can be a victim. Commons forms of securities fraud include but are not limited to: High Yield Investment Frauds, Ponzi & Pyramid Schemes, Advance Fee Schemes, Misconduct by an Investment Advisor, and Structured Notes. There are legal actions you can take if you have been the victim of securities fraud, especially if you’ve suffered substantial investment losses as a result. What is Securities Fraud? Securities fraud, also known as investment fraud or stock fraud, involves using false or misleading information to convince investors to make investment decisions that result in substantial losses. All forms of securities fraud aim to deceive investors into taking actions that benefit the perpetrator financially. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. The Different Perpetrators of Securities Fraud There are many different perpetrators of securities fraud, and they all have different motivations. Some may be driven by greed, while others may simply be trying to take advantage of investors. Regardless of their motivations, all perpetrators of securities fraud share one goal: to make money by deception. Securities fraud can be committed by a single person, such as a stockbroker or a financial advisor. It might also be perpetrated by an organization, such as a brokerage firm, corporation, or investment bank. In these scenarios, the target is usually an unsophisticated investor who is unaware of the fraud being committed. Independent individuals may also commit securities fraud, such as insider trading or market manipulation. In these cases, the individual investor is usually the perpetrator rather than the victim. Due to the actions of the independent individual, the entire market may be impacted, and other investors may suffer losses as a result. Unfortunately, the perpetrator of securities fraud may be unknown. This is often the case with internet fraud, where scammers set up fake websites or send out mass emails to trick investors into giving them money. Anyone can be a perpetrator of securities fraud, and anyone can be a victim. The best way to protect yourself is to be aware of the different types of securities fraud and to know what red flags to look for. What are Common Examples of Securities Fraud? There are many different types of securities fraud, but some are more common than others. When a broker or investment firm takes your money with the promise of investing it and then uses it for other things, you’ve been a victim of securities fraud. Securities fraud schemes are often characterized by offers of guaranteed returns and low- to no-risk investments. The most typical forms of securities fraud, as defined by the FBI, are: High-Yield Investment Frauds These types of securities fraud are often characterized by promises of high returns on investment with little to no risk. They may involve a few different forms of investments, such as securities, commodities, real estate, or other highly-valuable investments. You can identify these schemes due to their “Too good to be true” offers. These types of fraud tend to be unsolicited. Perpetrators may elicit investments from investors by internet postings, emails, social media, job boards, or even personal contact. They may also use mass marketing techniques to reach a large number of potential investors at once. Once the fraudster has received the investment money, they may simply disappear with it or use it to fund their own lifestyle. The investment itself may not even exist. Ponzi & Pyramid Schemes These types of securities fraud use the money collected from new investors to pay the high rates of return that were promised to earlier investors in the scheme. Payouts over time give the early impression that the scheme is a legitimate investment. However, eventually, there are not enough new investors to support the payouts, and the entire scheme collapses. When this happens, the people who invested at the beginning of the scheme often lose all of their money. In these schemes, the investors were the only source of funding. Advance Fee Schemes In these types of securities fraud, the investor is promised a large sum of money if they pay an upfront fee. The fees may be called “commissions”, “processing fees”, or something similar. The fraudulent organization will often require that the fee be paid in cash, wire transfer, or even cryptocurrency. They may also ask the investor to provide personal information such as bank account numbers or social security numbers. Once the fee is paid, the fraudulent organization will often disappear and the investor will never receive the promised money. Other Securities Fraud In addition to the above list provided by the FBI, at The Law Offices of Robert Wayne Pearce, P.A., we have found that the following types of securities fraud are...
Continue ReadingA margin call is a demand from your broker that you must deposit more money or securities into your margin account to cover potential losses. This typically occurs when a margin account runs low on funds, usually due to heavy losses in investments. When you buy stock on a margin, you’re essentially borrowing money from your broker to finance the purchase. While this is a strategy that can amplify your gains if the stock price goes up, it can also lead to painful losses if the stock price falls and you’re forced to sell other assets or put more money into your account to meet the margin call. In most, but not all cases, your broker will notify you of a margin call and give you a set amount of time to deposit more funds or securities into your account. You typically will have two to five days to respond to a margin call. Timeframes for responding to a call may vary depending on your broker and the circumstances. Regardless of the time frame, it is important that you take action as soon as possible. IMPORTANT: If you aren’t able to meet the margin call fast enough or don’t have any extra funds to deposit, your broker may also force you to sell some of your securities at a loss in order to free up cash. This is known as forced liquidation. In fact, many margin account agreements allow brokerage firms to liquidate your portfolio at their discretion without notice. Increased volatility in the market these days can sometimes bring about uncomfortable and surprising situations for investors, especially when it comes to a margin call. You may find yourself asking when do margin calls happen and how do they work. In this article, you will learn everything there is to know about margin calls, including: IMPORTANT: If you have suffered significant investment losses as a result of being forced to liquidate a margin account, you should speak to an experienced securities fraud attorney about your legal options. What Triggers a Margin Call? There are several things that can trigger a margin call, but the most common is when the value of securities in your account falls below a certain level set by your broker (house maintenance margin requirement) or securities exchange where securities are traded (exchange margin requirement). When this occurs, your broker will issue a margin call in order to protect themselves from losses and to ensure that your account has enough funds to cover potential losses. You’re then required to deposit additional funds or securities into your account to meet the call to bring your account back to the maintenance margin level. If you don’t make a deposit, your broker may sell some of your securities at a loss to cover the shortfall. Margin calls can occur at any time, but tend to occur during periods when there is high volatility in the markets. What happens when you get a margin call? A margin call is most often issued these days electronically, through your broker’s online platform. You can also receive an email or other notification from your broker informing you of the margin call and how much money you need to deposit by a certain time. What happens next depends on your broker and the situation. If your broker is not worried about the situation, they may give you some time to raise the extra funds to deposit into your account. If they are worried, they may demand that you meet the call immediately or they may even sell some of your securities to cover the shortfall if you don’t have the extra cash on hand without notice. Yes, a broker can sell your securities without your permission if you don’t have enough money in your account to meet a margin call. All of this depends upon the contract you signed when you opened your account which outlines the broker’s rights in these situations. It’s important to remember that your broker will most likely be interested in protecting their own financial interests rather than yours, so you should make sure that you understand your rights and obligations before entering into a margin agreement. Because they are not always required to give you time to meet a margin call, unless they are under contractual agreement to do so, they may not notify you before liquidating assets in your account to pay off any margin debt. If this happens, your investment portfolio may suffer significant losses. Unfortunately, even if you are in a position to meet the call, you may not be able to get your securities back if they have already been sold by your broker. When you opened up your margin account, you likely signed an agreement that gave your broker the right to sell your securities without notifying you first. This is why it’s important to understand the terms of your margin agreement before signing it. You should also be aware of the risks involved in trading on margin. MPORTANT: If your broker decides to sell your highly appreciated securities, you can be left with large deferred-tax liabilities as well as major capital gain tax expenses that must be paid in the relevant tax year. In addition, brokers can sell your securities within the margin account at an undervalued price, leaving you with even more investment losses. How long do you have to pay a margin call? The time frame for responding to a margin call can vary depending on your broker and the circumstances. Typically, brokers will allow from two to five days to meet the call. You will need to review your account agreement with your broker to be sure. Beware, most margin account agreements do not require the broker to give you any amount of time or notice before they liquidate. What happens if you cannot pay the margin call? Not meeting/paying a margin call can have long-term consequences for your investment portfolio and your financial well-being, especially if it leads to you incurring...
Continue ReadingThis is the ultimate guide to understanding broker-dealer fraud and misconduct for investors. For more than 40 years, the Law Offices of Robert Wayne Pearce, P.A. has been helping investors understand brokers, broker-dealers and the rules governing their activities. We understand that brokers and broker-dealers do not always act in the best interests of their customers. As a result, we have devoted our practice to helping investors who have been harmed by unscrupulous or negligent broker-dealers recover their losses through litigation or arbitration proceedings. In this guide, we’ll cover: What is Broker-Dealer Fraud? Broker-dealer fraud occurs when stockbrokers put their own financial interests ahead of their customers, violating their fiduciary duty. This can take many forms, including churning accounts to generate more commissions, misappropriating funds from customer accounts, making unsuitable investment recommendations, or even outright theft. Broker-dealers are held to a high standard of care in their dealings with customers. They must exercise care, skill and diligence when recommending investments, executing trades, and providing advice. When they fail to do so, they can be held liable for any losses suffered by their customers. Sometimes fraud is easy to spot – if a broker-dealer is stealing funds directly from an account, for example. Other times it may be more subtle, such as recommending investments that are not suitable for the customer’s needs or risk tolerance. When investors suffer significant losses due to broker-dealer fraud or misconduct, they may be able to recover damages through a process called FINRA arbitration. In these situations, it is best to consult with a securities attorney to determine the best course of action. What’s the Difference Between Broker-Dealer Fraud and Misconduct? Broker-dealer fraud is the intentional act of causing financial harm to customers by deliberately making false or misleading statements or omissions or engaging in dishonest or unethical practices. On the other hand, broker-dealer misconduct refers to negligence by a stockbroker in failing to meet their responsibilities and obligations as outlined in FINRA rules and regulations. For example, if a broker-dealer provides incorrect information to their customers or fails to take reasonable steps to ensure the accuracy of statements they make, this could be considered misconduct. Similarly, recommending investments that are not suitable for a customer’s needs or risk tolerance can also be considered misconduct. Investment losses due to either fraud or misconduct can be recovered through a FINRA arbitration. What are the Most Common Types of Broker-Dealer Fraud? There is a wide variety of broker-dealer fraud schemes, but there tend to be a few that are more common than others. When a broker-dealer fails to act in the best interest of their client, they may be engaging in one or more of the following practices: High-Yield Investment Frauds High-yield investment frauds are characterized by promises of high returns on investment with little to no risk. These types of fraud can involve several forms of investments, including securities, commodities, real estate, or other highly-valuable investments. You can identify these schemes by their “too good to be true” offers. Perpetrators may elicit investments from investors by internet postings, emails, social media, job boards, or even personal contact. They may also use mass marketing techniques to reach a large number of potential investors at once. Once the fraudster has received the investment money, they may simply disappear with it or use it to fund their own lifestyle. The investment itself may not even exist. Ponzi & Pyramid Schemes Ponzi and pyramid schemes use the money collected from new investors to pay the high rates of return that were promised to earlier investors in the scheme. Payouts over time give the early impression that the scheme is a legitimate investment. However, eventually, there are not enough new investors to support the payouts, and the entire scheme collapses. When this happens, the people who invested at the beginning of the scheme often lose all of their money. In these schemes, the investors were the only source of funding. Other Broker-Dealer Fraud In addition to the above list, at The Law Offices of Robert Wayne Pearce, P.A., we have found that the following types of securities fraud are also common: Misconduct by an Investment Advisor By far the most common type of broker-dealer securities fraud that our firm sees is misconduct by brokers. Brokers are supposed to act in their clients’ best interests (fiduciary duty), but some broker-dealers put their own interests ahead of their clients. For example, a broker-dealer might recommend that a client invests in a certain stock or mutual fund because it will generate a high commission for the broker, not because it is a good investment for the client. Other examples of misconduct by an investment advisor or broker include: Structured Notes Structured notes are investments that often combine securities of different asset classes as one investment for a desired risk and return over a period of time. They are complex investments that are often misunderstood by not only investors but the financial advisors who recommend them. Due to their complexity, it is easy for the terms of the investment to be misrepresented. For example, an advisor might tell their client that a structured note is “risk-free” when, in reality, there is a significant risk of loss. What Actions Can You Take if You Suspect Broker-Dealer Fraud? Broker-dealers must register with FINRA to participate in the securities industry, and FINRA’s arbitration program typically handles disputes between investors and broker-dealers rather than court proceedings. Compared to court proceedings, FINRA arbitration is typically faster, less expensive, and more private. To seek justice for losses due to broker-dealer fraud, filing a claim with FINRA’s arbitration program is recommended. Investors are advised to consult with an attorney to understand their rights and determine if they have a valid claim against the broker-dealer or associated financial professionals. An experienced investment fraud attorney can provide valuable guidance throughout the process. If you’ve lost a significant amount of your investments due to fraudulent broker-dealer activities, don’t hesitate to reach out for help. The Law Offices of Robert Wayne Pearce, P.A., can assess your case and represent you in the FINRA...
Continue ReadingWhen you searched for “best investment fraud lawyer” on Google, you came across a few different directory websites that claim to “rank” or “review” investment fraud law firms. As a consumer, you rely on these types of websites to give you an unbiased opinion on who the top service providers are. Unfortunately, the investment fraud lawyers that you see at the top of these lists have likely paid to be there. Directories are a pay-to-play platform where the best firms are not necessarily the ones that are listed first. This means that the order in which the lawyers are listed, or ranked, is not based on merit or quality, but rather on who is willing to pay the most money to publish them closer to the top. These directory websites have neither the knowledge nor expertise to determine who the best investment fraud lawyers actually are. They are looking to make a quick buck by selling ad space to the highest bidder. That is why I decided to write this article. With over 40 years of experience in the securities industry, I have first-hand knowledge of the top investment fraud law firms in the United States. Did You Lose Money Because of Investment Fraud? If you have lost money due to negligence or fraud by a stockbroker or advisor, the easiest way to know if you have a case is to call our office at 800-732-2889. Our investment fraud attorneys will evaluate your claim for free and let you know if we can help you recover your losses. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. I am publicly endorsing some of my firm’s biggest competitors. These are attorneys that I’ve worked with or cases that I’ve followed closely, and which I consider to be the best at what they do. I am publicly endorsing some of my firm’s biggest competitors. These are attorneys that I’ve worked with or cases that I’ve followed closely, and which I consider to be the best at what they do. Why would I do this? Simple. I want you, the investor, to have the best chance possible of recovering your losses. I am more qualified than Justia.com or FindLaw.com or Avvo.com to give my opinion to investors looking for a great investment fraud lawyer. Unlike these websites, I know first-hand the hard work, dedication, and success that each of these attorneys has achieved. My law firm has worked with many of them. We’ve studied their cases. We’ve referred cases to them. They’ve referred cases to us. While we would love for you to come to us first, we understand that you have other options and need to find the one that is best suited for your specific situation. Our goal is for you be successful no matter who you choose. We consider the following to be the best investment fraud lawyers in the United States: I. Robert Wayne Pearce – The Law Offices of Robert Wayne Pearce, P.A. Best Investment Fraud Lawyer – Based in Florida Reviews on Google | AV® Preeminent Rating – Martindale-Hubbell Attorney Robert Wayne Pearce is the Lead Attorney of The Law Offices of Robert Wayne Pearce, P.A. and is one of the top investment fraud lawyers in the country. He is a well-respected advocate for investors throughout the legal community; he is known for his fierce litigation skills and tireless advocacy on behalf of his clients. With over 40 years of first-hand experience with investment disputes in Florida, nationwide, and internationally, Mr. Pearce is one of the most experienced Investment Fraud Lawyers nationwide. Attorney Pearce has tried over 100 cases to trial verdict or arbitration award and only lost 4 cases for investors in his career. The Law Offices of Robert Wayne Pearce, P.A. has represented thousands of investors in securities arbitration cases and has been successful in recovering more than $175 Million on behalf of our clients. Our most significant case was College Health & Investment Ltd. v Esther Spero, where we obtained $21 million for our client as a result of investment fraud, breach of fiduciary duty, and civil theft. Mr. Pearce has also been AV Preeminent Peer Review Rated by Martindale-Hubbell, the highest available rating through that program. If you have suffered investment losses due to fraud, misrepresentation, or any other type of securities misconduct, we welcome you to contact our office for a free consultation. More: Read About Robert Pearce II. Lloyd Schwed – Schwed Kahle & Kress, P.A. AV® Preeminent Rating – Martindale-Hubbell Attorney Lloyd Schwed is a founding partner of Schwed Kahle & Kress, P.A., where he has practiced law for more than 45 years. Since 2005, Mr. Schwed has obtained the prestigious AV® Peer Review Rating from Martindale-Hubbell, which signifies “very high” ethical standards, trustworthiness and diligence, as well as “very high to preeminent” legal aptitude. Mr. Scweb received the AV® Preeminent Rating in 2011, which is the Highest Possible Rating that must be met for both Legal Ability and Ethical Standards. One of Mr. Scwed’s most notable cases is Gomez v. UBS Financial Services Inc. in which he recovered $18.2 million for his clients. This case was one of the biggest FINRA awards in the past 10 years. We have worked directly with Lloyd Schwed and his legal team and can attest to his experience, knowledge, and dedication to fighting for the rights of investors who have been victimized by securities fraud. III. Carl Schoeppl – Schoeppl Law, P.A. Peer Reviewed – Martindale-Hubbell Attorney Carl Schoeppl is the Managing Shareholder of the Law Firm of Schoeppl Law, P.A. Mr. Schoeppl used to work as a senior federal prosecutor for the United States Securities and Exchange Commission (“SEC”), under the Enforcement Division. Over the past several years, Mr. Schoeppl has been appointed to act as a receiver in complex investment fraud cases initiated by both the SEC and the Federal Trade Commission (FTC). Mr. Schoeppl and his legal team have been instrumental in obtaining millions of dollars for investors and customers in receivership litigation cases. A receiver is a court-appointed official who is tasked with taking control of...
Continue ReadingWhen securities fraud is discovered, legal action can be taken against the perpetrators as long as the statute of limitations for securities fraud has not passed. The investment and securities industry is heavily regulated to protect investors from fraud and other unscrupulous practices. Unfortunately, there are still many instances of securities fraud that occur each year. What is the Statute of Limitations for Securities Fraud? Under the Securities Exchange Act of 1934 Section 10(b) there are two distinct timeframes for filing claims related to securities fraud: a two (2) year statute of limitations and a five (5) year statute of repose. Investment Losses? Let’s Talk. or, give us a ring at 800-732-2889. IMPORTANT: Securities fraud is a complex area of law, and the statute of limitations can be complicated to determine. Due to this, if you believe you are a victim of securities fraud, you should consult with an experienced securities fraud attorney to discuss your legal options and whether the statute of limitations may apply to your case. This is where things can get complicated when dealing with lawsuits relating to securities fraud. Both of these timelines begin running on different dates, and it is important to understand the difference between them. For the two-year statute of limitations, the clock starts ticking when the plaintiff becomes aware of the “facts constituting the violation.” The five-year repose period begins from the defendant’s last culpable act, regardless of whether the plaintiff is aware of it or not. The pairing of these two timelines ensures that there is always a chance to take legal action against securities fraud, even if the victim was not aware of the fraud at the time it occurred. Regardless, if securities fraud has occurred, the sooner action is taken, the better. How does the law define when a securities fraud has been “discovered” or should have been discovered? Due to the complexity of the securities and investment market, it can be difficult to determine when a securities fraud has been “discovered” or should have been discovered. In part, this is why there is a range of two to five years after the date of the fraud within which legal action can be taken. As a good rule of thumb, the time starts ticking on the statute of limitations when the investor becomes aware of (or discovers) the facts or should have been aware of the facts that would cause a reasonable person to believe that securities fraud has occurred. This means two things: one, if the investor believes that he or she has been defrauded, the investor should act quickly and consult with an investment fraud attorney to discuss his or her legal options; and two, if the investor is unsure whether securities fraud has occurred, the investor should err on the side of caution and seek legal counsel to avoid losing the right to take action. IMPORTANT: Unfortunately, ignorance to a securities fraud often will not excuse the running of the statute of limitations. If you have suffered investment losses due to another’s actions, you may have a securities fraud claim, even if you were unaware of the fraud at the time it occurred. How is Securities Fraud handled in Court? The securities fraud cases for investors are typically handled in civil court and arbitrations, rather than criminal court. A vast majority of securities fraud are brought under Rule 10b-5 of the Securities Exchange Act of 1934, which prohibits “any manipulative, deceptive, or fraudulent practices” in the securities industry. In addition, securities fraud cases can be tried through the FINRA arbitration process. More and more disputes are being handled through FINRA arbitration, as it is generally faster and less expensive than going to court. You can represent yourself in a FINRA arbitration, but even FINRA recommends that you consult a FINRA arbitration attorney to ensure that your case is properly presented and all possible legal options are explored. How to Report Securities Fraud If you believe that you have been the victim of securities fraud, there are a few things you can do: In securities fraud claims, timely filing of a claim is critical. As a result, if you believe you have been the victim of securities fraud, it is essential to act quickly. Filing a complaint with FINRA or the SEC generally will not help you get compensated for your losses. However, it is an important step in the dispute resolution process as any investigation by the regulators might put pressure on the defendants to resolve your claim and get compensation for your losses. An experienced securities fraud attorney can help you navigate the process of filing a claim and recovering your losses. Consider Speaking with a Securities Fraud Attorney If you believe that you have been the victim of securities fraud, you do have legal options available to you. Finding yourself a victim to securities fraud can be a confusing and frustrating experience. We can help. At The Law Offices of Robert Wayne Pearce, P.A., we have successfully represented many investors who have been victims of securities fraud. To schedule your free confidential consultation, please call us at 561-338-0037 or fill out one of our short contact forms.
Continue ReadingYour investments are important—that’s why so many individuals hire investment brokers and financial advisors to manage their investment accounts. Having a qualified broker can be a great advantage to the growth of your investments. Unfortunately, however, investment and securities fraud remains a common and serious issue in the United States each year. So what do you do if you are a victim of investment fraud at the hands of your broker? The U.S. Securities and Exchange Commission (SEC) has a mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. In furtherance of this goal, the SEC allows individual investors to file complaints against their broker or their broker’s firm. If your broker committed negligence or broker fraud, you may be entitled to file a complaint and recover your losses. Violations of securities law can be reported to the SEC, which will conduct a comprehensive investigation. Looking for information on how to file an SEC complaint against a broker? Look no further than the Law Offices of Robert Wayne Pearce, P.A. Not only can our attorneys help you report your broker, but we can also help you recover your investment losses. Filing a complaint against your broker with the SEC can be a great way to hold them accountable and put future investors on notice of their wrongdoing. However, doing so doesn’t necessarily help you get your money back. Contacting an attorney, however, can be the first step toward actually recovering your personal investment losses that you suffered at the hands of your broker. Stockbroker fraud attorney Robert Wayne Pearce has over 40 years of experience handling complex securities, commodities, and investment arbitration and litigation cases. He has helped countless clients through their investment-related disputes, and he will fight to do the same for you. Please don’t hesitate to send us an online message or call (800) 732-2889 today for assistance. Why Would I File a Complaint? There are numerous reasons you may need to file a complaint with the SEC against your broker. Common examples of wrongful actions by a broker or brokerage firm include: Of course, not all actions by a broker constitute fraud for which you can file a complaint with the SEC. Remember, the stock market is inherently volatile, so the fact that you lost money does not necessarily mean your broker took any wrongful actions. An experienced investment fraud attorney can help you determine whether filing a complaint with the SEC against a broker might be warranted. Filing a Complaint with the SEC Against a Broker: What You Need to Know If you suffer financial losses due to the negligence or misconduct of a broker or brokerage firm, filing a complaint with the SEC against the broker can be an important step to take. Not only can this help prevent future investors from being subject to the same fraudulent and predatory actions, but it may also provide you with an avenue to recover your losses. How to File a Complaint Against a Broker The first step in reporting your broker for fraud or misconduct is to file your formal complaint with the SEC. The SEC provides an opportunity for members of the public at large to submit broker complaints electronically using the SEC’s Investor Complaint Form. What to Include in Your Complaint The Investor Complaint Form may appear simple to complete. However, there is more to it than you might think. The form requires basic information such as: The complaint form can play a vital role in whether the SEC allows your case to move forward. Thus, the more information you are able to provide, the better equipped the SEC will be to investigate your complaint. An experienced investment fraud attorney can be a great benefit to you as you complete your Investor Complaint Form and move forward in the process. What Happens After Submitting My Complaint to the SEC After the SEC receives your complaint, they will thoroughly investigate your claim and all relevant evidence. Central to the process is confidentiality. The SEC conducts its investigations in a manner that will protect the parties and preserve the integrity of the complaint process. Then, depending on the allegations asserted in your form, the complaint will be referred to the appropriate SEC office. The Office of Investor Education and Advocacy The Office of Investor Education and Advocacy handles basic investor questions regarding securities law and complaints related to financial professionals. These SEC officers will also advise complainants of possible remedies and, in some cases, will intervene on your behalf and reach out to brokers or other financial advisors concerning the issues raised in your complaint. This office may also refer your complaint to another division of the SEC for resolution. Enforcement Division The Division of Enforcement, on the other hand, employs attorneys to review information and tips regarding securities law violations. Officers in this office investigate the claims in their entirety, retrieving whatever evidence may be necessary. Again, it is important to note that the investigations conducted by the SEC are typically confidential unless made a matter of public record. After completing a thorough investigation, the Enforcement Division may recommend that the SEC bring civil actions in federal court or before an administrative law judge to prosecute securities law violations. Why Hire an Investment Loss Attorney to Assist with Complaints Against Your Broker? Reporting the fraudulent misconduct of a broker to the SEC is important. However, filing an SEC complaint is not the only way to hold a broker or brokerage firm accountable. In fact, in some cases, filing an SEC complaint may not be enough to get you the compensation you need to recover from your investment losses. In these cases, it is imperative that you contact an attorney to help you fight for the recovery you need and deserve. An experienced investment and securities fraud attorney or FINRA arbitration lawyer can help you evaluate your case and determine how best to move forward. At the end of the day, reporting...
Continue ReadingStockbroker fraud is, unfortunately, all too common. Investors typically understand that there is always some risk when investing in the stock market. However, what they don’t expect is for their broker to intentionally deceive them and engage in illegal activities to make a profit. Brokers are strictly regulated by the Financial Industry Regulatory Authority (FINRA) and must adhere to a fiduciary standard when providing advice to their clients. When a stockbroker fails to act in the most beneficial manner for their client, they may be participating in unlawful activity known as stockbroker fraud. What is Stockbroker Fraud? Stockbroker fraud is any act committed by a broker or financial advisor that violates the securities laws or their fiduciary duty to their client, generally in an effort to gain profits for themselves or their firm. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. There are many different ways a stockbroker may violate their legal and ethical obligations towards their clients. If a broker commits securities fraud, their employer – which is often a large brokerage firm – will be held accountable for any losses the client suffers. 12 Common Types of Stockbroker Fraud Below are the most common examples of stockbroker fraud and other stockbroker misconduct: Recommending Unsuitable Investments Brokers have an obligation to make sure that any investments they recommend are suitable for the investor’s individual needs and objectives. If a broker recommends a high-risk investment to someone who is looking for conservative, low-risk options, this could be seen as unsuitable advice. Unsuitable investments can lead to serious losses for the investor, so it is important that brokers provide advice tailored to their clients’ individual needs and goals. Outright Theft or Misappropriation of Funds This is one of the most serious forms of stockbroker fraud. It involves a broker taking money from their client’s account without authorization and using it for their own personal gain. This could include transferring funds to accounts they control or even selling securities in the client’s account and pocketing the proceeds. There are many different ways brokers can steal from their clients, so it’s important for investors to closely monitor their accounts. If you find unusually large transactions or other suspicious activity, you should contact a stockbroker fraud attorney. Churning (Excessive Trading) Churning occurs when a broker engages in excessive buying and selling of securities in a client’s account, often for the purpose of generating commissions. While some trading activity is expected with any investment strategy, churning can be seen as irresponsible behavior that only benefits the broker while putting the investor at risk. You can often spot churning by looking for unusually high commission charges or a large number of transactions with short holding periods. Unauthorized Trading on a Client’s Account Similar to churning, unauthorized trading occurs when a broker executes trades in a client’s account without their knowledge or authorization. This is an illegal activity that can be seen as a form of theft if the broker does not have the client’s permission to act on their behalf. Unauthorized trading can also be seen as a breach of fiduciary duty, since the broker should have obtained their client’s consent before entering into any transactions. Lack of Diversification Another form of stock broker fraud is a lack of diversification. This occurs when a broker invests all or most of the client’s money in one type of security, such as stocks, bonds, or mutual funds. Diversifying an investment portfolio can help reduce risk and maximize returns, so failing to diversify a client’s investments could be seen as a breach of fiduciary duty. Misrepresenting or Omitting Information It is the responsibility of a stockbroker to provide accurate and complete information about any investment they recommend. If they fail to do so, or intentionally misrepresent the facts, this could be seen as a form of stock broker fraud. Not only that, but they must also disclose any risks associated with the investments they recommend. Failing to do so could lead to serious losses for their clients. Failing to Follow Instructions In most cases, your broker is ethically and contractually compelled to follow your directions when you’re buying or selling stock. If you instruct your broker to make a certain trade, and they fail to do so, this could be seen as a breach of their duties. In some situations, the broker won’t flat-out ignore your instructions but might attempt to persuade you into keeping a stock that you wanted to sell, for their benefit rather than yours. Failure of a broker to follow your instructions, and even improper pressure to change your instructions, can be grounds for recovering your loss. Over-Concentration of Assets Over-concentration occurs when a broker invests too much of a client’s money in one particular security or sector. This is risky, as it could cause the investor to suffer significant losses if that security or sector declines in value. Imagine if your broker recommended investing all of your money in a structured product, and then the structured product suddenly declined. You could find yourself with a margin call or a forced liquidation of your portfolio. Failure to Disclose a Personal Interest in a Security Brokers owe their clients a duty of disclosure, meaning they must disclose any personal interest they have in security before recommending it. Imagine if your broker recommended that you invested in a certain stock only for you to later find out they had a majority ownership stake in the company. Of course, you would be upset. You have a legal right to expect your broker to put your interests first. Failing to disclose their personal stake in the security could be seen as a breach of fiduciary duty and constitute stock broker fraud. Negligent Portfolio Management A big reason you hired a broker in the first place was to get professional advice on how to manage your investments. If the broker fails to follow through on their duties and takes actions that are deemed negligent, this could be seen as a form of stockbroker fraud. When it...
Continue ReadingAs an investor, you expect your financial advisor to properly manage your investment portfolio. Unfortunately, this is not always what happens. Financial advisors owe their clients certain obligations with respect to their investment accounts. Failure to adhere to these obligations can result in a claim for financial advisor malpractice. In certain circumstances, the financial fraud committed by your financial advisor will be obvious. For example, if your financial advisor forged your signature on a document, he or she clearly committed misconduct. However, most financial malpractice claims are not this straightforward. The securities attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped hundreds of investors recover losses caused by financial advisor malpractice. Contact us today for a free consultation. What Is Financial Advisor Malpractice? Financial advisor malpractice is a term that refers to a financial advisor’s failure to satisfy the fiduciary standards and obligations that are in place to protect investors. As fiduciaries, financial advisors are legally bound to act in their clients’ best interests and not exploit them for personal gain. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. In some cases, financial advisor malpractice can be straightforward. Fabricating documents, forging a client’s signature, or lying to a client about the status of an investment are all examples of clear financial advisor malpractice. Other times, it can be more subtle and difficult to identify. As such, most investors become aware that they’ve been the victim of financial advisor malpractice only when their investments start to decline in value. This is often after it’s too late to recoup their losses, as the trusted advisor has already moved on to work with new clients who have yet to suffer the same fate. Note: If you believe you are a victim of financial advisor malpractice or investment fraud, the securities fraud lawyers at The Law Offices of Robert Wayne Pearce, P.A. can help. We have a history of successfully recovering financial losses for clients who have been hurt by unethical or fraudulent practices. Contact us today at (800) 732-2889 or fill out one of our short contact forms. What Are My Financial Advisor’s Obligations and Duties to Me? Registered financial advisors must adhere to certain fiduciary duties, or obligations, with respect to their clients. Financial advisors who are not registered and are not making securities recommendations to retail customers still owe their clients certain obligations, but they are not as stringent as fiduciary duties. Fiduciary Duties Registered investment advisors are bound by fiduciary duties to their clients. The Investment Advisers Act of 1940 defines the role and responsibilities of investment advisors. At its core, the purpose of this act was to protect investors. A financial advisor owes their client a duty of care and a duty of loyalty. The Securities and Exchange Commission (SEC) interprets these fiduciary duties to require a financial advisor to act in the best interest of their client at all times. The SEC provides additional guidance for each fiduciary duty specifically. The duty of care requires that an investment advisor provide investment advice in the client’s best interest, in consideration of the client’s financial goals. It also requires that a financial advisor provide advice and oversight to the client over the course of the relationship. The duty of loyalty requires an investment advisor to disclose any conflicts of interest that might affect his or her impartiality. It also means that the financial advisor is prohibited from subordinating his or her client’s interests to their own. Related Read: The Most Common Examples of Breach of Fiduciary Duty (And What to Do) The Suitability Rule Broker-dealers in the past were subject to less demanding obligations. The Financial Industry Regulatory Authority (FINRA) regulates broker-dealers in the United States. FINRA previously imposed a suitability obligation on broker-dealers that only required them to make recommendations that were “suitable” for their clients. Under the suitability rule, a broker-dealer could recommend an investment only if it was suitable for the client in terms of the client’s financial objectives, needs, and risk profile. Broker-dealers did not owe a duty of loyalty to their clients and did not have to disclose conflicts of interest. Recently, however, FINRA amended its suitability rule. Regulation Best Interest FINRA recently amended its suitability rule to conform with SEC Regulation Best Interest (Reg. BI), making it clear that stockbrokers now uniformly owe certain heightened duties when making recommendations to retail customers. As with fiduciary duties, under Reg. BI, all broker-dealers and their stockbrokers now owe the following duties: Disclosure, Care, Conflicts, and Compliance. However, it’s important to remember that they owe these duties only when they make recommendations regarding a securities transaction or investment strategy involving securities to a retail customer. While these changes are still new, one thing is certain—the Reg. BI standard is definitely a heightened standard compared with the previous suitability standard. Forms of Financial Advisor Malpractice Investors usually hire financial advisors because they do not have experience in investing. With this lack of experience, how can an investor know when a financial advisor is committing malpractice? There are several ways financial advisors can commit financial malpractice. Lack of Diversity Financial advisors have a duty to ensure your investment portfolio is properly diversified to include a variety of investment assets. That may include a mixture of stocks, bonds, or mutual funds in multiple different sectors. A portfolio that lacks diversification is likely to result in significant losses to the client in the event of a market downturn in a specific sector. If you believe your financial advisor failed to properly diversify your portfolio, contact a securities attorney today. The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have significant experience handling these types of cases and will ensure the financial advisor responsible for your losses is held accountable. Your Investments Are Unsuitable Every investor is unique. That means financial advisors must consider the specific goals and needs of each individual client before recommending investments. A financial advisor must consider a client’s risk...
Continue ReadingFinancial advisors are highly trusted professionals who help make decisions that impact your economic future. When that trust is broken through a bad or negligent act, the investor suffers and the financial advisor must be held accountable. When you’re looking at your investment losses, in the worst-case scenario, you may be asking yourself if a financial advisor can steal your money. Can Financial Advisors Steal Your Money? Yes, an unethical financial advisor can be in a position to steal money from you, especially if you have given them direct access to your money. Because of this, a vast majority of reputable financial advisors never take ownership of your money to protect your best financial interests. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. It is recommended that you always keep control over your investments and never give any financial advisor full discretion over your accounts. Giving an advisor direct access allows them to steal money with ease. Avoid doing so unless you’re 100% confident in the individual you’re dealing with. Note: If you believe your financial advisor stole your money, there are several options for you to recover. We recommend speaking with an experienced investment fraud lawyer to learn more about your rights and how you may recover your losses. The Fiduciary Duty of a Financial Advisor All financial advisors are held to a standard of care when dealing with investors. Registered financial advisors have a higher fiduciary duty to their clients under the Investment Advisers Act of 1940. This is the highest legal standard of care and requires financial advisors to act in the best interest of their clients, make suitable investments, and disclose relevant information to you. Knowing whether your financial advisor is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator is important because if the advisor breaches the fiduciary duty, you can bring a claim against the financial advisor through the Financial Industry Regulatory Authority (FINRA). FINRA is the governing organization that creates and enforces rules for advisors and their firms and assists in resolving disputes between advisors and investors. Do You Have a Claim? If your financial advisor outright stole money from your account, this is theft. These cases involve an intentional act by your financial advisor, such as transferring money out of your account. However, your financial advisor could also be stealing from you if their actions or failure to act causes you financial loss. Losing money through investment is not enough to bring a claim against your financial advisor. Remember, there is no guarantee of return when investing. Even if your financial advisor made the recommendation, under federal securities law and FINRA regulations, you cannot hold your advisor liable simply because they lost you money. You need a viable cause of action, such as a breach of fiduciary duty, negligence, or malpractice. Types of Claims Against Your Financial Advisor Understanding securities law and FINRA regulations are crucial to know whether you have a valid claim against your financial advisor. The investment loss recovery attorneys at The Law Offices of Robert Wayne Pearce P.A. have over 40 years of experience in securities and investment law. They have helped countless investors recover their financial losses caused by bad or negligent acts by their financial advisors. The Law Offices of Robert Wayne Pearce P.A. have handled hundreds of cases involving many types of misconduct by financial advisors. Negligence In a negligence claim, you do not need to show that the financial advisor intentionally acted in a harmful way, but rather that the advisor failed to do something they had an obligation to do and caused the economic loss. For example, your advisor may have made an unsuitable investment by failing to take into consideration your risk tolerance. If you lost money based on the recommended investment, it may be appropriate to file a claim for negligence against your financial advisor. Breach of Fiduciary Duty A financial advisor who breaches his fiduciary duty has failed to meet the required standard of care. You may have a valid claim for breach of fiduciary duty if your advisor failed to execute your stated objectives or did not disclose information about a product. Other examples of breaching the fiduciary duty include: In each of these instances, the financial advisor did not act in your best interest. Failure to Supervise A brokerage firm is responsible for supervising the actions of its financial advisors and any other employees. If the firm fails to do this, it can be held liable for your financial losses. What You Can Do There are several stages of resolution to recover your financial losses. Depending on the facts of your case, you may be able to resolve it and recover without any formal proceedings, or you may have to litigate. The attorneys at The Law Offices of Robert Wayne Pearce P.A. have helped investors in all stages and have successfully recovered over $175 million in losses for our clients. Review Customer Agreement If you believe your financial advisor stole money from you, either directly or indirectly through losses in your account, you should first review your customer agreement. Understand what sort of authority you gave your financial advisor and if there is a mandatory arbitration clause. This clause is common in most customer agreements with brokerage firms. These clauses often state that you waive your right to file a lawsuit against your advisor and agree to engage in a FINRA arbitration proceeding instead. Informal Dispute Resolution Claims against financial advisors are incredibly complex legal matters. There are informal options available, however. Even at this stage, you should contact an investor loss recovery attorney for assistance. FINRA, which regulates the investment industry, instructs investors to first pursue informal dispute resolutions before filing a claim against their financial advisor. Depending on the severity of the financial advisor’s misconduct, you may be able to resolve the matter directly with your advisor or the firm’s compliance department. If this is not suitable...
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