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How to Recover Losses from Distressed Securities

Distressed securities refer to financial instruments belonging to a company that’s experiencing financial distress or is in bankruptcy. Though risky, these types of securities are popular for attracting aggressive investors who are looking to make a big cash-out. Unfortunately, this includes financial advisors and brokers you might have trusted with investment money, too.  

Since distressed securities offer potentially high returns, some financial advisors are in the habit of wrongly advising their clients with the hope of benefiting personally. It’s only after an investment loss that such advisors are uncovered. If you’re wondering whether you can recover losses you’ve suffered from distressed securities, a securities fraud lawyer can answer this and other questions after reviewing your case.

Why Security Brokers Invest in Distressed Securities

Investing in distressed securities is a double-edged sword. 

One of the main reasons an advisor may choose to invest in distressed securities is their potential for large returns. Another reason is their hope that the company’s financial problems are not as serious; they foresee the securities’ value improving over time. In some cases, the advisor can anticipate the company’s liquidation but invests anyway in the hope that there’ll be enough money for claimants in the end. 

However, in many cases, the risk of an investment loss if the company files for chapter 7 bankruptcy is greater than how much the broker stands to gain for you or for themselves. When you suspect that your financial advisor has wrongly advised you or your stockbroker has invested in such high-risk securities, consider reaching out to an attorney early enough for legal guidance.       

Suing a Broker for Losses from Distressed Securities

You can recover losses from distressed securities when you have the right professional and act on time. Start by talking to a lawyer about your situation so that they can get started with the investigation right away. 

An investment attorney who has experience with such cases can gather evidence and file an arbitration claim to prove that your advisor or stockbroker invested in distressed securities, leading to your financial losses. If the advisor acted against industrial or FINRA’s ethical regulations, you might be eligible for compensation to recover your losses.  


Get Help from an Investment Loss Lawyer

When it comes to something as serious as an investment loss, investors need to know that they may have options to hold everyone responsible accountable. This includes brokers or advisors who failed to do their due diligence or knowingly invested your money in distressed securities to benefit themselves. 

If you’ve lost your investment to distressed securities, a lawyer from Wolper Law Firm is ready to help you recover your losses. For a free case evaluation, speak to us at 800.931.8452 or fill out our contact form.

Now is the time to talk to an investment loss recovery lawyer. We can help recover your investment loss. Free consultations, always.

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