Palm Beach and West Palm Beach Securities Litigation & Arbitration Lawyer
The Wolper Law Firm, P.A. sues brokerage firms, financial advisors and financial professionals to recover investment losses caused by negligent or fraudulent misconduct.
West Palm Beach and Palm Beach are, per capita, among the wealthiest cities in the United States. These cities are filled with hard working and prominent families that have built their wealth, in some instances, over generations.
Unfortunately, wealth and success attracts financial fraud. In recent history, Bernie Madoff and Robert Shapiro have perpetrated billion dollar ponzi schemes and operated fraudulent enterprises that have ravaged wealthy communities, including Palm Beach and West Palm Beach. There are a also multitude of brokerage firms, financial institutions and private banks that have a presence in West Palm Beach and Palm Beach. These financial institutions employ financial advisors and investment professionals that have a legal obligation to put your interests ahead of their own. When money is involved, unfortunately, this does not always happen.
The Wolper Law Firm Has A Unique Pedigree
The Wolper Law Firm is a client focused and results oriented law firm that is dedicated to the recovery of investment losses caused by negligent or fraudulent practices by brokerage firms, financial advisors and financial professionals. Matt Wolper, the managing principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities litigation matters and has tried cases all over the country.
For fourteen years, Matt Wolper represented the largest banks and brokerage firms on Wall Street. Simply put, he knows how the other side things and evaluates cases. He has the knowledge and skill set to position your case for a successful outcome. The Wolper Law Firm also has the necessary resources and trial pedigree to take your case the distance if a suitable resolution cannot be reached prior to trial.
The Wolper Law Firm works on a contingency basis, meaning we don’t earn a fee unless you recover money. We are truly your partner in success.
What Duties Are Owed To Me By My Financial Advisor?
The law in Florida recognizes that brokerage firms and Financial Advisors owe a fiduciary duty to their customers. This means that they must put your interests ahead of their own and recommend securities that are appropriate and suitable for you based on your specific needs and objectives.
The law recognizes additional duties, including that brokerage firms and their employees:
- Understand the nature of the investment’s risks, rewards, and strategy before recommending the investment
- Make only suitable recommendations to the investor based upon the investor’s objectives, needs, and circumstances
- Furnish information to the investor that would be material to the investor’s decision about the investment recommendation
- Not misrepresent or omit material information
- Refrain from self-dealing.
To the extent a financial advisor or investment advisor directs the trading activity in an account through discretionary trading, enhanced fiduciary duties are owed to the client. These duties include, but are not limited to, warning investors regarding a change in market conditions that may impact the value of their investments.
What Is A Suitable Investment?
Making suitable investment recommendations is the cornerstone of proper investment advice. All brokerage firms and financial advisors have a duty to recommend suitable investments that are consistent with the needs and objectives of the investor. Brokerage firms and financial advisors must learn all material facts about an investor before making any recommendations and must match all investments with a customer’s stated investment profile. Failure to recommend suitable investments may result in a claim to recover attenuating investment losses.
The Financial Industry Regulatory Authority (FINRA) has defined the standards in which investment recommendations made by brokerage firms and registered financial advisors are evaluated. The FINRA suitability rule focuses on three fundamental concepts: (1) reasonable basis suitability, (2) quantitative suitability, and (3) customer-specific suitability.
In short, what this means is that your Financial Advisor must learn all material facts about you—the investor—as well as understand the risks and benefits of the investments they are recommending. After careful consideration by your Financial Advisor, he or she must only recommend investments that match your needs and objectives. If you advise your Financial Advisor that you do not want to take undue risk, he or she is obligated to refrain from recommending aggressive investments. Similarly, if you advise your Financial Advisor that you want to generate income, he or she should not recommend a significant allocation to equities. These are examples of unsuitable recommendations that violate the law.
What Is Securities Fraud?
Securities fraud reveals itself in many shapes and sizes. Fraud can be overt and egregious or it can lie beneath the surface for years without investors becoming aware. In the financial services industry, often times securities fraud is concealed for extended periods of time.
Based on our experience in the financial services industry, securities fraud is layered and is perpetrated in stages.
First, investment banks and brokerage firms that create and/or sell securities to customers make significant amounts of money bringing new securities to market in an initial public offering, or IPO. For example, investment banks and brokerage firms that create proprietary mutual funds or structured products earn substantial fees for new offerings. Often times, these fees can be more than 4.5%. In the instance of real estate investments trusts, or REITs, often times the fees can exceed 7%.
In addition, mutual funds and structured products are nothing more than corporate structures that are comprised of a basket of underlying securities, such as stocks and bonds. Sometimes, these securities products are comprised of stocks or bonds with which the investment bank or brokerage firm has a business relationship. This may create a conflict of interest because it encourages the investment bank to fill their proprietary products with specific securities rather than what may be in the best interest of the investor.
After securities are offered to customers in the IPO, in order for the customer to sell the security, he or she has to do so in a secondary market. When the securities are sold, the brokerage firm earns a commission. If another customer purchases those shares, the brokerage firm earns another commission. Depending on the product, commissions may be higher for selling a proprietary mutual fund or structured product than in the other alternatives. This creates an incentive for brokerage firms to put their interests ahead of the customer.
Second, brokerage firms and financial advisors are obligated to make full disclosure of materials facts prior to a customer purchasing a security. The Financial Industry Regulatory Authority (FINRA) has made clear that it is insufficient for a Financial Advisor to rely on the prospectus for communicating risk factors to a customer. In practicality, what this means is that you as the investor are entitled to know the risks and benefits of the securities recommended by your Financial Advisor so that you can make an informed investment decision. If your Financial Advisor does not explain the risks, and you lose money in the recommended investment, you may be entitled to recover your investment losses.
Third, some Financial Advisors are simply salespeople with great personalities but little depth of knowledge in the securities industry. More significantly, these same Financial Advisors show minimal interest in understanding the investments that they sell to customers. All too often, Financial Advisors have not read the prospectus, have not spent the time learning about the risks of the investment, and fail to monitor those investments on a going forward basis. This creates a situation where an investment may be suitable at the time of purchase. However, over time, due to a changing investment environment, those same investments have become unsuitable. The lack of diligence exercised by your Financial Advisor may result in the omission of material information that could be actionable.
What are the common signs of securities fraud?
The common signs of securities fraud are:
- Sudden, precipitous drops in the value of a security you own
- Vague, non-specific answers by your Financial Advisor to specific, direct questions
- Excessive trading in your account
- Your Financial Advisor is pushing proprietary securities that are issued by his or her brokerage firm.
- Your Financial Advisor guarantees that you will make money or that you will not lose money
If you live in West Palm Beach or Palm Beach, and have concerns about whether your brokerage firm or Financial Advisor is engaging in fraudulent activity, the Wolper Law Firm can help.
Are Brokerage Firms Liable For The Negligent Or Fraudulent Conduct Of Their Employees?
In many cases, yes. The law recognizes a claim known as failure to supervise, which individual investors can bring against brokerage firms for negligent or fraudulent conduct by the brokers or advisors they employ.
Firms cannot turn a blind eye to misconduct. In fact, they have a duty to monitor the accounts within their firm and to run checks for red flags. When warning signs arise, the firms have a duty to take action.
In other cases, the firm itself might be complicit in negligence or fraud. In either scenario, our law firm can help.
Elder Abuse In Palm Beach And West Palm Beach
With the aging baby boomer population, many of whom reside in Palm Beach and West Palm Beach, elder abuse has become more prominent in the financial services industry. It has been reported that the baby boomer population will have assets of approximately $26 trillion by 2029.
In many cases, brokerage firms and Financial Advisors turn a blind eye to the activity in the accounts of their elderly clients. Excessive or unusual withdrawals and the presence or involvement of individuals, other than the actual account owner, in the accounts (i.e., friends, neighbors, co-workers and even other family members) are red flags that must be reviewed by brokerage firms and Financial Advisors. Recent studies suggest that elder abuse is more likely to be perpetrated within the network of people closest to the victim, including their family members.
Recently, many states, including Florida, have enacted new elder abuse legislation to strengthen the laws and protections for our growing elderly population. This new legislation imposes more responsibility on financial institutions to monitor and report suspicious account activity in accounts owned by elderly clients.
If you believe that you or someone close to you is a victim of elder abuse or financial misconduct, contact the Wolper Law Firm immediately for a free consultation and evaluation of potential claims.
The Wolper Law Firm Also Represents Honest Financial Advisors In West Palm Beach And Palm Beach In Regulatory, Employment And Compliance Matters
The Wolper Law Firm understands that many Financial Advisors in West Palm Beach and Palm Beach are honest, thoughtful and diligent students of the financial markets. Many Financial Advisors provide comprehensive guidance to their customers and are “value added.” Notwithstanding their efforts, Financial Advisors may still find themselves with regulatory or compliance problems.
The financial markets are cyclical and go through periods of appreciation followed by periods of decline. If a Financial Advisor correctly allocates his or her client’s portfolio, it should be protected against significant fluctuations in value. However, a client may still file a customer complaint against the Financial Advisor, which remains on their CRD unless and until is expunged through a formal expungement proceeding filed with the Financial Industry Regulatory Authority (FINRA). The Wolper Law Firm can help West Palm Beach and Palm Beach Financial Advisors navigate these complex issues when they arise and even assist in the expungement of unwarranted complaints from their Form U-4 disclosure documents maintained with the Central Registration Depository, or CRD. Matt Wolper has handled expungements for Financial Advisors all over the country.
Separately, when a West Palm Beach and Palm Beach Financial Advisor becomes at odds with his or her employing brokerage firm, it is necessary that an attorney is consulted and retained. This often occurs when the brokerage firm eliminates a line of business that is crucial to the Financial Advisors’ financial well-being. It also occurs when the brokerage firm makes promises to Financial Advisors in order to lure them from competitors. These promises can include money, assistants, or access to certain trading desks and products. If the brokerage firm retracts its promises, and leaves the Financial Advisor in an untenable position, counseling with a securities attorney at an early stage is critical. This conduct by the employing brokerage firm may constitute a violation of the employment laws, including anti-discrimination statutes, and wage and hour statutes. It may also rise to the level of constructive discharge or wrongful termination.
The Wolper Law Firm can help counsel Financial Advisors regarding disputes with their employing brokerage firm and, if necessary, litigate your employment case through the trial phase. If you are a Financial Advisor in West Palm Beach or Palm Beach, and you have regulatory, compliance or employment issues or disputes, contact the Wolper Law Firm for a free consultation and case assessment.
Schedule a Free Consultation with a Palm Beach and West Palm Beach Securities Litigation & Arbitration Attorney.
Call 800.931.8452 to schedule a free, no-obligation consultation.