Securities Litigation and Arbitration

Lawyers for Aggrieved Investors

Wolper Law Firm stands ready to assist you with any form of dispute with a financial advisor, brokerage firm or other fiduciary. Here are some of the many types of securities litigation with which we have extensive experience.

Fraud or Misrepresentation

Securities Fraud

Securities fraud encompasses a wide range of misconduct. They generally involve the withholding or misrepresentation of facts necessary to make an informed decision about whether to invest in a security. For example, your financial advisor is legally required to fully explain the risks of any investment, properly disclose the fees and commissions associated with it, and always put your interests ahead of their own. On this the law is very clear. If you believe you may be the victim of securities fraud, read on to learn how to spot the warning signs.

Breach of Fiduciary Duty

A fiduciary is someone who acts on behalf of another to manage assets and finances, such as a financial advisor or broker. Fiduciary duty requires that fiduciaries always act in the best interests of their clients. Specifically, the law holds financial advisors to specific standards of disclosure, due diligence, and consideration of their clients’ needs. While any portfolio can suffer losses, a sudden and steep loss can indicate a breach of fiduciary duty.

Due Diligence

Due diligence is required to ensure investors are being fully informed about a potential purchase. This involves a detailed check of the status, financial and operational, of a potential investment.

Fiduciary Duty

Brokers have an obligation to act in your best interest.

Unsuitable Investments

Financial advisors have a duty to recommend only suitable investments. The standard for suitability requires the recommended securities be properly vetted, not excessive in amount and appropriate to the individual investor. Before making recommendations to you as an investor, a financial advisor must have a complete picture of your investment profile — that is, your needs, goals and risk tolerance. They must provide guidance they believe to be appropriate and also disclose all risks so that you can make a fully informed decision. Suitability claims are common in investment recovery cases, but require experience and care to properly handle.

Unauthorized Trading

All trades that your financial advisor makes on your behalf must be authorized by you. Even in cases where you may have given your advisor leeway and discretion, they must make certain you are aware of and authorize all trades. Generous commissions on investments may tempt advisors to take advantage of clients for their own benefit. Clients who take a passive approach may become the victim of unauthorized trading. Commissions and losses imposed as a result can be recovered.

Lack of Diversification

Diversification is the cornerstone of safe investing. When investing your life savings, you need the security that comes from diversification across asset classes, market sectors and geopolitical arenas. Your trusted advisors are required to take this into consideration when discussing and handling your investments. Failure to diversify can be the result of an inexperienced, overconfident broker or advisor trying to beat the market or make a big win for their client. They might also simply fail to apply proper oversight and due diligence. A lack of diversification can mean steep losses or it can mean missing out on valuable gains. It can spell the difference between security and uncertainty.

Churning

Churning refers to a financial advisor trading securities for the purpose of generating fees or commissions — in other words, putting their own interests ahead of yours. One common example is selling one security and soon purchasing another, similar security. Your market exposure remains unchanged, but you incur trading fees, and perhaps the advisor earns commissions. Churning can be subtle; we are experts at the detailed analysis required to build a strong case.

Failure to Supervise

The responsible stewardship of your savings is the responsibility not only of your financial advisor, but also of their employing broker. Brokerage firms are required to maintain a reasonable system of supervising all employees to ensure adherence to laws and standards. Inappropriate and illegal behavior on the part of advisors indicates a failure of this supervisory system and may form the basis for a cause of action.

Selling Away

Financial advisors are permitted to sell to their clients only securities that are approved by their brokerage firm. Sales of anything else are strictly prohibited. This is for the safety of the investor; only those securities which have undergone a thorough vetting process by a brokerage are appropriate for financial advisors to sell. The other reason for the rule is to prevent conflicts of interest. An advisor might be tempted to persuade clients to invest in businesses in which the advisor holds an interest. Even if the advisor receives no compensation for doing so, this would still constitute illegal selling away.