As an investor, you’re putting a lot of your trust, not to mention your money, in the hands of your financial advisor or stockbroker. But when your broker defrauds you, you may be able to recover your investment losses by pursuing arbitration with the Financial Industry Regulatory Authority (FINRA).
One of the more common ways that brokers have been known to take advantage of their investors is by engaging in private securities transactions, or selling away. Below, we provide additional information about what private securities transactions are and how to go about initiating a FINRA arbitration complaint.
FINRA Rule 3280: Private Securities Transactions
FINRA Rule 3280 describes the regulations surrounding private securities transactions of an associated person. A private securities transaction occurs when a registered agent or associated person sells an investment opportunity that is not offered by the brokerage firm or financial institution employing the associated person. As mentioned, this is also known as “selling away” within the securities industry.
The trouble with private securities transactions is that they are often unregistered—one of the telltale signs of an unsuitable investment. The brokerage firm hasn’t had the opportunity to do their due diligence and therefore has no idea whether the private security is legitimate.
Recovering Investment Losses Caused by Private Securities Transactions
You may not always be aware of what types of products are offered by your brokerage firm. Some brokers have been known to take advantage of this by selling away under the radar until a considerable loss occurs.
If you have endured losses because your broker suggested private securities transactions without informing you of what they are or the risks associated with them, you may be entitled to full restitution. A FINRA arbitration complaint could be the best way to recover your losses and put this experience behind you.
Get Help from a Lawyer if You’ve Been Defrauded
When you suffer catastrophic losses caused by private securities transaction investments suggested or controlled by your stockbroker, you may be entitled to full restitution. Contact a lawyer at Wolper Law Firm to discuss your path to financial recovery. We can be reached by phone at 800.931.8452 or through the online contact form we have provided below.