Understanding investments can be quite difficult for an average person, which is why many opt to put their investments in the hands of their stockbrokers and advisors. Unfortunately, sometimes the entrusted advisor causes you to suffer losses through acts of misconduct. However, the law has provided legal remedies to get you compensated for such losses.
An investor can file an arbitration claim seeking financial compensation when you suffer investment losses because your brokerage firm or advisor failed to uphold the FINRA rules and regulations. Therefore, you can sue for investment losses with the help of an experienced investment loss lawyer.
However, you need to understand the different types of investment misconduct to be sure you have a case. Read on for the common types of investment misconduct you can sue for.
Misrepresentation Through Omission
Half the truth in investment advice counts as misrepresentation since you end up making a decision based on the information you received while unaware of existing factors that would have affected your decision.
When you talk to a broker or financial advisor, they have to relay all relevant facts to you regarding a decision to invest. The duty is, in particular, a legal requirement. Sometimes, a shady advisor or broker may attempt to omit a few details on the investment to lure you into investing. If you lost your investment due to misrepresentation, you could sue to recover your losses.
Failing to Supervise Adequately
If you made your investment through a brokerage firm, you should know that firms are required by law to set up systems that supervise and oversee their financial representatives. The Securities Exchange Act stipulates that brokerage firms are liable for any losses suffered due to their failure to supervise their financial advisors adequately.
Suppose you want to sue for investment losses on these grounds. In that case, it’s essential that you speak to an investment losses attorney as early as possible; consult an attorney before expressing your intention to sue the brokerage firm.
If an advisor failed to monitor the changing markets or act responsibly, with care regarding their clients’ interests, they could be in breach of their duty. Any financial advisor also has the responsibility to inform you of any potential benefits and risks of the investments in question.
Selling away is investment misconduct if brokers sold the securities to an investor when their specific brokerage firm did not oversee the sale. A broker may act in self-interest by engaging in selling away to attain the higher commissions with risky investments.
A broker may also fail to make the firm aware of a securities sell to skip some regulations in the firm’s compliance department; when you suspect that the broker was involved in selling away, it’s prudent to speak to an attorney on your recovery options for your losses.
Lack of Diversification and Ponzi Schemes
Putting all your money in a single investment poses a substantial risk. Your stockbroker must create a diversified portfolio for you. If your broker does not diversify your portfolio, causing you to make losses, you can file a lawsuit against your broker.
A Ponzi scheme, on the other hand, is when somebody solicits an investment from you and uses investments from previous investors to pay you back. In a Ponzi kind of fraud, no actual investments are being made; the Ponzi scheme fraudster is paying back each previous investor with the new money that comes in.
Hire an Investment Loss Attorney
Investment fraud can fall into broad categories, from negligent brokers, liability through omissions, and investment fraud, among others. Speaking about your situation with an investment loss attorney will help them identify exactly which rules your broker or advisor failed to uphold and your possible legal remedies. If you suspect that your investment account has suffered losses due to your broker or advisor’s misconduct, it may be time to start legal proceedings.