Securities & Exchange Commission Complaint: How to Report Your Broker Anonymously

Your investments are important—that’s why so many individuals hire investment brokers and financial advisors to manage their investment accounts.  Having a qualified broker can be a great advantage to the growth of your investments. Unfortunately, however, investment and securities fraud remains a common and serious issue in the United States each year. So what do you do if you are a victim of investment fraud at the hands of your broker?  The U.S. Securities and Exchange Commission (SEC) has a mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation. In furtherance of this goal, the SEC allows individual investors to file complaints against their broker or their broker’s firm. If your broker committed negligence or broker fraud, you may be entitled to file a complaint and recover your losses. Violations of securities law can be reported to the SEC, which will conduct a comprehensive investigation.  Looking for information on how to file a complaint against a broker? Look no further than the Law Offices of Robert Wayne Pearce, P.A. Not only can our attorneys help you report your broker, but we can also help you recover your investment losses.  Filing a complaint against your broker with the SEC can be a great way to hold them accountable and put future investors on notice of their wrongdoing. However, doing so doesn’t necessarily help you get your money back. Contacting an attorney, however, can be the first step toward actually recovering your personal investment losses that you suffered at the hands of your broker.  Stockbroker fraud attorney Robert Wayne Pearce has over 40 years of experience handling complex securities, commodities, and investment arbitration and litigation cases. He has helped countless clients through their investment-related disputes, and he will fight to do the same for you. Why Would I File a Complaint? There are numerous reasons you may need to file a complaint with the SEC against your broker. Common examples of wrongful actions by a broker or brokerage firm include: Offering fraudulent or unregistered securities;  Misappropriating client funds; Insider trading; Making false or misleading statements; and Failing to file required reports with the SEC. Of course, not all actions by a broker constitute fraud for which you can file a complaint with the SEC. Remember, the stock market is inherently volatile, so the fact that you lost money does not necessarily mean your broker took any wrongful actions.  An experienced investment fraud attorney can help you determine whether filing a complaint with the SEC against a broker might be warranted. Filing a Complaint with the SEC Against a Broker: What You Need to Know If you suffer financial losses due to the negligence or misconduct of a broker or brokerage firm, filing a complaint with the SEC against the broker can be an important step to take.  Not only can this help prevent future investors from being subject to the same fraudulent and predatory actions, but it may also provide you with an avenue to recover your losses. How to File a Complaint Against a Broker The first step in reporting your broker for fraud or misconduct is to file your formal complaint with the SEC.  The SEC provides an opportunity for members of the public at large to submit broker complaints electronically using the SEC’s Investor Complaint Form.  What to Include in Your Complaint The Investor Complaint Form may appear simple to complete. However, there is more to it than you might think.  The form requires basic information such as: Your name and address; Basic information about your broker; The type of investment involved; A brief description of the events giving rise to your complaint; and Any actions you may have already to resolve your complaint against your broker, such as mediation, arbitration, or court action. The complaint form can play a vital role in whether the SEC allows your case to move forward. Thus, the more information you are able to provide, the better equipped the SEC will be to investigate your complaint. An experienced investment fraud attorney can be a great benefit to you as you complete your Investor Complaint Form and move forward in the process.  What Happens After Submitting My Complaint After the SEC receives your complaint, they will thoroughly investigate your claim and all relevant evidence.  Central to the process is confidentiality. The SEC conducts its investigations in a manner that will protect the parties and preserve the integrity of the complaint process.  Then, depending on the allegations asserted in your form, the complaint will be referred to the appropriate SEC office. The Office of Investor Education and Advocacy The Office of Investor Education and Advocacy handles basic investor questions regarding securities law and complaints related to financial professionals. These SEC officers will also advise complainants of possible remedies and, in some cases, will intervene on your behalf and reach out to brokers or other financial advisors concerning the issues raised in your complaint. This office may also refer your complaint to another division of the SEC for resolution. Enforcement Division The Division of Enforcement, on the other hand, employs attorneys to review information and tips regarding securities law violations.  Officers in this office investigate the claims in their entirety, retrieving whatever evidence may be necessary. Again, it is important to note that the investigations conducted by the SEC are typically confidential unless made a matter of public record.  After completing a thorough investigation, the Enforcement Division may recommend that the SEC bring civil actions in federal court or before an administrative law judge to prosecute securities law violations.  Why Hire an Investment Loss Attorney to Assist with Complaints Against Your Broker? Reporting the fraudulent misconduct of a broker to the SEC is important. However, filing an SEC complaint is not the only way to hold a broker or brokerage firm accountable.  In fact, in some cases, filing an SEC complaint may not be enough to get you the compensation you need to recover from your investment losses. In these cases,...

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The Most Common Types of Investment Frauds in 2021 [How to Take Action]

Consult a Highly-Experienced and Dedicated Investment Fraud Attorney to Learn How to Protect Your Rights If You Suspect Your Broker or Financial Planner of Fraud Hiring a reputable investment advisor is frequently a wise decision. You did things right by hiring someone you thought you could trust, but you still lost money. Knowing more about types of investment frauds could help you understand what you need to do. A skilled investment loss attorney could investigate your situation and determine if you are the victim of investment fraud.  At the Law Offices of Robert Wayne Peace, P.A., we devote our extensive experience and advanced skill to protecting investors who fell prey to unscrupulous investment professionals. Contact us today to learn more about how we can help hold your financial advisors accountable for fraud or malpractice. Investment Fraud is More Pervasive Than You Think Your story is probably like many others. You have worked hard and saved money to plan for your future. So instead of “playing the market” yourself, you engage a financial advisor to help protect your nest egg.  You probably felt at ease with your decision to hire a financial advisor.  Your financial advisor is a fiduciary, and, accordingly, they owe you a duty of care. This is someone you believe you can trust with your savings and rely on to make the right decisions for you and your family. Most financial advisors are honest, hardworking, and caring professionals who try their best for their clients. Notwithstanding their strict ethical rules, some investment advisors cannot resist the temptation of making money the easy way.  If you have lost money due to investment fraud or negligence, we invite you to reach out or call 561-338-0037. How Do You Know If You’re the Victim of Some Type of Investment Fraud? Everyone knows the old saying that “if it’s too good to be true, it probably is.” This adage still pertains to investment opportunities even today. Many fraudulent schemes perpetrated by dishonest financial advisors lure unsuspecting investors into their trap with some type of “get rich quick” scheme. We will examine five types of investment fraud commonly employed by shady financial advisors. Promissory Note Fraud If you have ever bought a home or a car and financed the transaction, you probably understand the significance of a promissory note. Buying and selling promissory notes is a sophisticated investment strategy. Your advisor must adhere to the strict regulations enforced by the U.S. Securities and Exchange Commission (SEC) when transferring promissory notes. Promissory notes might seem like a worthwhile investment. The deal allows you to hold the note and receive interest payments as well as repayments on the principal. You might have purchased the note for a discount, which increased your potential return. Investing in promissory notes, especially short-term notes, is extremely risky. Short-term notes offer higher than market interest rates and the allure of making a substantial amount of money quickly.  Promissory note scams prove to cost private investors millions of dollars. The seller of the note has no responsibility to register short-term notes with the SEC. Therefore, small investors cannot research the viability of these notes, the historical performance of similar notes, and whether the dealer has a good reputation.  Investors accept some risk. However, investors could get wiped out if they invest in promissory notes without proper guidance from a reputable financial advisor. Small or retail investors may not have any recourse against the party who defaults on a promissory note.  They have other options, however. Private investors like you could file a lawsuit against your financial advisor from fraud if they misrepresented or lied about the investment’s inherent risk, its return, or any other material fact concerning the promissory note. Proving fraud is difficult. That is why you need a strong legal advocate for individual investors.  Ponzi and Pyramid Schemes Ponzi schemes always fail. Yet, people still use them as a way to make easy money. Ponzi schemes always fail because the person running the scam will always run out of money.  The average investor might not identify a Ponzi scheme if it is well disguised. However, suppose you have given money to someone to invest, and there are no underlying assets in the fund, or you are asked to recruit others to join in the initial investment. In that case, you might be unwittingly involved in a Ponzi scheme.  Pyramid or multi-tiered marketing strategies are a similar investment tactic. Pyramid schemes are not inherently unlawful like Ponzi schemes. Notwithstanding, participants in multi-tiered marketing schemes often get swindled out of their money because they continue to invest, with little or no return, based on a promise that they will reach the top of the pyramid.  Like Ponzi schemes, a fraudulent pyramid scheme offers no legitimate underlying investment. On the other hand, some legitimate multi-tiered marketing programs sell consumer goods or other products.  Pyramid schemes are not investment groups or pooled funds. Pyramid schemes operate on the premise you make money based on the number of participants you recruit.  Suppose you or a loved one believes they have lost money because an investment advisor conned you into thinking that you could earn a good return by investing in a strategy that does not involve assets. In that case, you should talk with an investment attorney right away. Investing in Real Estate In America, we are conditioned to believe that the real estate market always goes up. As a result, real estate investing could be a vital component of a diversified portfolio. However, flipping houses, buying distressed properties, or becoming a landlord is not for everyone. Unprepared people could lose their shirts because of bad real estate investments. They have bad tenants, underestimate the rehab costs of a home, or overestimate their return when trying to sell and lose their investment. Moreover, they might end up in debt after making a bad deal. Buying and flipping houses are not the only way to make a living in real estate. Beware if your financial...

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Things You Need To Know About a Securities Lawyer

Securities are financial instruments that can offer promising opportunities for investors to earn income and profit upon sale. Securities come in a variety of forms, including: Stocks, Options,  Municipal (government) bonds, Corporate bonds, Mutual Funds, Closed-End Funds, Promissory Notes, Real Estate Investment Trusts (REITs), and Exchange Traded Funds (ETFs). But investment losses are a possibility no matter what type of security you invest in. Some securities are more inherently risky than others. Because of the complexities of securities, investors often seek out experienced financial advisors or brokers to handle their investments. Investors expect their advisors to provide honest, transparent advice and to act in a way that serves the client’s best interests. Unfortunately, that is not always what happens.  If you have suffered investment losses due to the actions of a financial advisor, contact a securities lawyer today. You might be wondering, What does a securities lawyer do? The answer is simple—a securities lawyer can be an advocate in your corner who will help you fight for your rights in the aftermath of your investment losses.  Securities lawyer Robert Wayne Pearce has decades of experience helping investors recover. Call The Law Offices of Robert Wayne Pearce, P.A., today to discuss your case.  Why Would I Need a Securities Lawyer? When a financial advisor’s misconduct results in financial losses to their client, the financial advisor may be liable for securities fraud. However, suffering losses does not automatically entitle you to compensation. Investing is inherently risky, and success is never a guarantee. So what forms of misconduct amount to investment fraud? Knowing the most common types of investment fraud claims brought by investors is a good place to start. Breach of Fiduciary Duty Registered investment advisors are held to a fiduciary duty standard when it comes to serving their clients. Being a fiduciary essentially means that you have a legal duty to act in your client’s best interest. In some cases, a breach of fiduciary duty is easy to recognize. For example, if an investment advisor only recommends products that will generate the highest commission fees, they are putting their interest in gaining commissions over their client’s interest. However, a breach of fiduciary duty is not always so easy to recognize. Other ways a fiduciary can violate his or her duties include: Failure to disclose material facts; Commingling of investment funds; Failure to disclose conflicts of interest; Usurping an investment opportunity; and Misappropriation of client funds.  The fiduciary standard is the most stringent standard of care in American law. However, not all investment professionals must comply with this standard. The Investment Advisors Act of 1940 mandates that registered investment advisors adhere to the fiduciary standard. Other types of advisors may have more limited fiduciary duties.  Failure to Supervise Brokerage firms are responsible for the conduct of their securities representatives. FINRA Rule 3110 requires registered brokerage firms to establish and maintain a “reasonably well-crafted system” to supervise its representatives, so the firm can ensure compliance with securities laws and regulations. Some of the most common failure to supervise claims include: Inadequate screening practices; Inadequate training of representatives; Failure to install appropriate written supervisory procedures; Failure to follow up on suspected misconduct; Lack of sufficient reviews and inspections; Failure to effectively monitor transactions; and Failure to effectively monitor registered representatives’ communication.  Brokerage firms who fail to adequately supervise their representatives open the door for their customers to be taken advantage of. If you believe your representative was not being properly supervised, contact a securities lawyer today to discuss your case.  Fraud or Misrepresentation You need access to all relevant information about a security before you can make an informed decision on whether to invest. Thus, a financial advisor must disclose all relevant information when presenting you with an investment opportunity.  The failure to disclose material information about an investment is a form of investment fraud. If your broker or financial advisor failed to disclose information material to an investment opportunity, contact a securities lawyer to discuss your claim. Unauthorized Trading A broker or financial advisor must have valid authorization before effectuating a transaction in your investment account. You can grant authorization to your advisor in two ways: Open a discretionary trading account; or Grant express authorization for each individual trade. A discretionary account permits your broker to make trades in your account at his or her discretion, within the parameters you allow.  Otherwise, express authorization must be given for each individual transaction made in your investment account.  Excessive Trading Excessive trading, also known as churning, occurs when an investment professional makes repeated trades in a client’s account for the sole purpose of generating commissions. Churning is most common in discretionary accounts because investors might show alarm if their investment professional is seeking trade authorization repeatedly.  Making excessive trades is not a good investment strategy and often results in significant losses for investors. If your financial advisor or broker is repeatedly buying and selling securities in your account to drive up their commissions, contact a securities lawyer today.   Lack of Diversification An ideal investment portfolio contains multiple types of securities in a variety of sectors. This minimizes the risk of suffering significant losses if one sector of the stock market tumbles.  A failure to diversify a client’s investment portfolio is a form of investor fraud. If you suffered investment losses because your portfolio was over-concentrated, you may be entitled to relief.  What Does a Securities Lawyer Do? Unfortunately, investment professional misconduct that causes investors to suffer significant losses is not uncommon. If you find yourself in this situation, you may not know what your options are or what steps to take next. This is where a securities lawyer comes in.  If you are considering hiring a securities lawyer, you might also be wondering, What does a securities lawyer do? An experienced securities attorney will review your case to help you determine what to do to protect your rights and finances. Then, a securities lawyer can help you fight for the recovery you deserve.  Contact a...

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What to Do When Your Financial Adviser Fails to Act in Your Best Interest

Is hiring a financial advisor in your best interest? In many cases, it may be when it comes to your investments. According to the SEC, approximately 6 in 10 households in the United States own securities investments. With more Americans investing, there is an increased need for financial advisors who can provide valuable insight into how best to invest and manage your accounts.  A financial advisor acting in your best interest is one of the best assets you can have when it comes to your investments. However, not all financial advisors live up to this standard.  Before you hire a fiduciary to represent your investment interests, it is important to first understand the duties your financial advisor owes you. By doing so, you will be better equipped to recognize when yours may not be acting in your best interest.  If you need help determining whether a financial advisor acting in your best interest and what you can do if they did not, we want to help. The Law Offices of Robert Wayne Pearce, P.A., has represented countless defrauded investors who have fallen victim to the actions of their advisors. Investment loss attorney Robert Wayne Pearce has over 40 years of experience handling a broad range of securities and investment disputes. Give us a call today to see what we can do for you. Fiduciary and Financial Advisor: Your Best Interest Is What Matters Most When you hire a financial advisor to provide you counsel regarding your investments, you expect that they will act in your best interest. The relationship between you and your advisor is a “fiduciary” relationship.  This fiduciary relationship requires a financial advisor to act in a certain manner when it comes to their clients’ investments. But what exactly is a “fiduciary duty,” and how do I know if my financial advisor owes me a duty to act in my best interest? We’ll dive into these questions in more detail below.  Fiduciary Duties: An Overview A fiduciary is someone who acts on behalf of someone else. In the investment context, a financial advisor who is hired to provide counsel and advice regarding their investments is a fiduciary. At its core, a fiduciary relationship relies on trust and good faith between the advisor and the client.  Being a fiduciary means that an investment advisor must act in their client’s best interest, putting their client’s needs over their own needs. In short, a fiduciary duty is a legal responsibility owed by the fiduciary (financial advisor) to act in the principal’s (client) best interest.  A fiduciary’s main duties are to: Put the client’s best interests first, ahead of their own; Avoid conflicts of interest or disclose them to the client as soon as they arise; and Act with honesty, good-faith, and loyalty toward the client.  Failure by a financial advisor to act in your best interest may constitute a breach of their fiduciary duty. This can result in serious liability for the advisor. Is Everyone a Fiduciary?  No, not everyone will be considered a fiduciary.  A fiduciary relationship is a special relationship that arises only in specific circumstances. The Investment Advisers Act of 1940 requires only registered investment advisors to abide by fiduciary obligations to act in a client’s best interests. Thus, all investment advisors who are registered with the SEC or a state securities regulator are fiduciaries. Broker-dealers and stockbrokers, on the other hand, are not fiduciaries. The New “Best Interest” Rule: A Replacement for the Suitability Standard Until recently, there was a lower standard of care that applied to most brokers and agents. This was governed by FINRA Rule 2111, otherwise referred to as the “suitability” standard.  Unlike a fiduciary standard of care, suitability required only that a broker-dealer make investment decisions that were “suitable” for his or her client based on the client’s investment objectives. They did not have to put their client’s interests ahead of their own. Further, they were free to recommend products that might benefit themselves, so long as the product was suitable for the client. This changed on June 30, 2020, when the SEC enacted Regulation BI—the Best Interest Rule. Now, regular stockbrokers also have a duty to act in the best interests of their retail clients when making recommendations about their investments. Specifically, Regulation BI imposes four obligations upon broker-dealers and associated persons:  Provide disclosures to customers regarding the relationship at the time of or before making any recommendations;  Exercise due care, or reasonable diligence, care, and skill, in making recommendations to customers;  Establish, maintain, and enforce procedures and policies to address potential conflicts of interest; and  Establish, maintain, and enforce procedures and policies to achieve compliance with Regulation BI.  If you feel your financial advisor or broker has failed to act in your best interest and live up to their obligations, seek help promptly from an experienced attorney. How Do I Know If Someone Is a Fiduciary? The easiest way to know for sure if a financial advisor is a fiduciary is to ask them. You can also check on the SEC Investment Advisor Database for federally registered investment advisor firms. Another way is to ask about an advisor or advisor firm’s pay structure. If an advisor is paid based on commission, he or she is most likely not a fiduciary. Fiduciaries usually work on fees only, so an advisor who advertises that they work on commission may not be acting as a fiduciary. But again, remember that even if your advisor is not a federally registered investment adviser held to a fiduciary standard, they still owe you certain obligations. All stockbrokers now have a duty to act in the best interests of their retail investors when making recommendations regarding their investments. Breach of Fiduciary Duty and What to Do If Your Financial Advisor Doesn’t Act in Your Best Interest A fiduciary breaches his or her duty by acting in their own interest rather than in their client’s interest. Additionally, failure to act in your best interest may give rise to a...

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How to File a Complaint Against a Financial Advisor

When investors hire a financial advisor, they expect the advisor to act in their best interest to prevent unnecessary losses. Unfortunately, however, financial advisors do not always live up to these expectations.  In some cases, a financial advisor fails to follow an investor’s requests and guidelines or otherwise engages in misconduct, causing the investor to suffer losses. When this happens, the investor may be able to file a complaint against the advisor to recover his or her losses.  But how do you file a complaint against a financial advisor? And when do you know it may be time to do so?  If you or a loved one has suffered significant investment losses at the hands of your financial advisor, contact The Law Offices of Robert Wayne Pearce, P.A., today. With more than 40 years of experience, our investment loss recovery attorneys can help you understand when and how to file a complaint against an advisor. Give us a call to discuss your case, and see what our team can do for you.  A Brief Overview of FINRA and How It Affects Your Ability to File a Complaint Against a Financial Advisor Before discussing how to file a complaint against an advisor, it is important to have an understanding of the process in general and whether you can bring a claim at all.  Financial advisors and their employers are governed by the Financial Industry Regulatory Authority (FINRA). FINRA’s stated mission is to “safeguard the investing public against fraud and bad practices.” FINRA has the power to take disciplinary actions against registered financial advisors or broker-dealers who violate the industry’s rules.  In 2019, FINRA reported that it initiated 854 disciplinary actions, levied $39.5 million in fines, and ordered restitution of $27.9 million be paid to investors. FINRA also expelled 6 member firms, suspended 21 member firms, barred 348 individuals from the securities industry, and suspended 415 individuals.  In short, FINRA provides significant protections for investors and processes through which advisors can be held accountable for their misconduct. However, it is important to note that you may not be able to file a complaint against an advisor in court as you might expect.  Required Investor Arbitration When you open a brokerage account with a member firm regulated by FINRA, you will likely sign a customer agreement. This agreement controls many aspects of the investor-advisor relationship, including potential disputes you may have with your advisor or their firm in the future.  More often than not, these customer agreements contain a mandatory arbitration clause. An investor must arbitrate through FINRA when:  There is a written arbitration agreement;  The dispute is with a broker or firm who is a member of FINRA; and The dispute is related to the securities business of the broker or firm.  If all these are true, then you must bring any claim you may have against your broker or their firm to FINRA arbitration, rather than filing a lawsuit in the court system. Nevertheless, you do still have an opportunity for your claim to be heard and to hold your advisor accountable.  How FINRA Arbitration Works Many people believe that going to court is the best way to hold a financial advisor accountable. However, this is not necessarily the case. In fact, FINRA arbitration is much more common than you might think.  Arbitration is an alternative dispute resolution method that allows parties to a legal dispute to resolve their issues outside of court. Much like in a court case, the parties file pleadings, present testimony and evidence, and make oral arguments.  The key difference between a trial and arbitration is the forum. Whereas a trial is presented in front of a judge or jury, an arbitration is presented before a panel of independent arbitrators chosen by the parties.  However, just as a judge or jury renders a final judgment at trial, an arbitration panel also renders a final and binding award on the parties in the arbitration. Thus, arbitration can still be an effective method of resolving your claims with a financial advisor.  When Can I File a FINRA Complaint Against a Financial Advisor? Just because you lost money on an investment does not necessarily mean you should file a complaint against your financial advisor. Rather, you must show that you lost money because of your financial advisor’s negligence or misconduct.  Some of the most common types of investment fraud for which you may be able to file a complaint against your financial advisor include:  Ponzi schemes,  Pyramid schemes, “Pump and dump” scams, Advance fee fraud,  High yield investment frauds, and  Offshore scams.  Additionally, financial advisors have a fiduciary duty to their investors to reasonably invest and manage their investments. If your financial advisor breaches his or her duty, resulting in monetary loss, you may be entitled to file a complaint.  Of course, there are many ways in which a financial advisor can commit misconduct. For more information on what constitutes a breach of duty by a financial advisor, read our post, Can I Sue My Financial Advisor Over Losses? Filing Your Complaint Against a Financial Advisor The first step in initiating your complaint is completing what is called a “statement of claim.” The statement of claim details what occurred in your particular case.  This is your opportunity to tell FINRA your side of the story, so it is imperative that it is as complete and detailed as possible. You then submit your statement of claim to FINRA, after which time the case will move forward.  The steps following the filing of your complaint include:  The filing of an answer by the opposing party,  Arbitrator selection,  Prehearing conferences,  Discovery,  The arbitration hearing, and Final decision and awards. FINRA’s arbitration process can be faster and less formal than a court trial. However, it is still helpful to have an experienced attorney in your corner.  An investment fraud attorney can help you draft and file your statement of claim. This is arguably one of the most important parts of the FINRA arbitration process. ...

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