2023 - Page 4 of 4 - Law Offices of Robert Wayne Pearce

Mar 11, 2023

How to File a Formal Complaint Against Your Financial Advisor

When you hire a financial advisor, you expect the advisor to act in your 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 an official complaint against the financial advisor through the Financial Industry Regulatory Authority (FINRA). In this article you will learn how to file a complaint against a financial advisor to recover your losses.

Mar 10, 2023

GWG Holdings L Bonds: Complaints & Investment Losses

Are you grappling with significant financial losses due to GWG Holdings’ Chapter 11 bankruptcy and the turmoil surrounding GWG L Bonds? Understandably, this situation has left many investors in distress, facing uncertain futures. Our firm specializes in assisting those impacted by the GWG L Bonds crisis. If you’re an investor facing losses, immediate legal assistance might be crucial. Contact us to explore your options for recovery and ensure your rights are protected in this complex financial debacle. IMPORTANT: As of February 2022, GWG Holdings has failed to pay $13.6 million in payments to GWG L bondholders. These were high yield, high risk, illiquid investments that as stockbrokers should have been wary and not recommended to investors with conversative or moderate risk tolerances. The Law Offices of Robert Wayne Pearce, P.A. is currently investigating claims against stockbrokers related to recommendations to purchase GWG Holdings L bonds (“GWG L bonds”) and is offering free consultations to those who have suffered GWG L bond losses. If you have suffered GWG L bond investment losses, our experienced securities litigation attorneys are prepared to discuss the matter and provide their legal opinion as to whether you can recover damages against the broker-dealer who recommended and sold you GWG L bonds. Please contact our law firm at 561-338-0037 or online for a free consultation. What are GWG L Bonds? In 2012, GWG Holdings created and has since sold nearly $2 billion in GWG L bonds to investors. These high-yield bonds were unrated and illiquid investments and therefore, unsuitable for investors with conservative or moderate risk tolerances. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. GWG Holdings issued the GWG L bonds to raise capital to purchase an individual life insurance policyholder seeking liquidity or cash by selling his/her life insurance policy to GWG Holdings for more than the surrender value but substantially less than the policy’s face value. GWG Holdings would then make the premium payments and hope to receive a payout worth greater than what it paid for the policy after the original policy matures or the policyholder passes away. The subject GWG L bonds were created to finance these life insurance policy purchases by GWG Holdings. The problem for investors was the GWG L bond investments depended on insurance policy premiums and benefits being paid out according to assumptions and statistical models, thus making them speculative investments for investors seeking income and protection of their capital. Further, GWG L bonds had no secondary market, which prevented investors from liquidating should they need the cash immediately. In other words, money used to purchase GWG L bonds was essentially trapped from the moment of purchase. Moreover, the only collateral supposedly backing GWG Holdings are interests in GWG subsidiary companies that purportedly owned real assets, including the insurance policies. Don’t Be Discouraged by GWG Holdings’ Bankruptcy As early as April 2022, news sources reported that GWG Holdings was filing for Chapter 11 bankruptcy protection. However, this news should not stop investors from seeking the opinion of a skilled and experienced securities attorney and getting just compensation. Broker-dealers and their agents who misrepresented and/or made unsuitable recommendations as to the GWG L bonds may still be held liable for losses in investor accounts. In other words, an account holder can still file a FINRA arbitration against the broker-dealer to recover losses in GWG L bonds for misrepresentations, unsuitable recommendations, failure to conduct adequate due diligence, negligence, etc. You should not let your broker-dealer or broker/financial advisor convince you otherwise. Robert Wayne Pearce, P.A. Recovers Investment Losses The attorneys at Law Offices of Robert Wayne Pearce, P.A. are experienced in litigating high-yield and speculative fixed-income instrument securities loss cases. For over 40 years we have represented investors in arbitration and securities litigation matters, including FINRA arbitration proceedings in nearly every state. Contact us now at 561-338-0037 or contact us online to schedule your free initial consultation. GWB L Bonds Were Sold for High Commissions! According to GWG Holdings, the GWG L bonds were sold by Emerson Equity, the managing broker-dealer, which partnered with other brokerage firms that also sold the L bonds to their retail customers. The commissions on such sales by the brokerage firms were as high as 8%. The Law Offices of Robert Wayne Pearce, P.A. suspects that many other broker-dealers were involved in the recommendation and sale of the GWG L bonds to their customers. Some of the firms alleged to have sold L bonds to their customers include: If the name of your broker-dealer does not appear on the list above, do not be alarmed. Rather, call us at 561-338–0037 or contact us online for free consultation to discuss whether you may have a claim to recover damages. Recover Your GWG L Bond Investment Losses in a FINRA Arbitration The Law Offices of Robert Wayne Pearce, P.A. is prepared to help investors who have sustained damages or monetary losses not only in GWG L bonds but other investments in your account in FINRA arbitration. If you were one of those investors who have suffered losses, you should seek the immediate advice of an experienced investment fraud attorney with more than 40 years of experience representing investors in investment fraud and broker-dealer negligence cases. It is imperative that you seek our consultation as soon as possible, as there are applicable eligibility rule and/or statutes of limitation that may forever bar your claim against the broker-dealer who sold you the GWG L bonds if you do not file your claim in a timely manner. We Don’t Get Paid Unless You Get Paid! The Law Offices of Robert Wayne Pearce, P.A. accepts cases on a contingency fee basis. This means if we do not recover money for you, you will not incur any fees owed to our firm. In other words, our attorney’s fees are collected only if we successfully settle your case or obtain a monetary award at the final arbitration hearing. We will also bear the cost of your case through the...

Mar 6, 2023

How to Respond to a CFTC Subpoena

Receiving a subpoena from the CFTC (U.S. Commodity Futures Trading Commission) is often met with panic by anybody who receives one. The recipient will usually have no advanced notice of the subpoena, other than a letter from the CFTC stating that he or she should produce documents related to a specific time period. The recipient may be scared of what will happen if they do not comply with the subpoena, but in fact there are several ways to proceed after receiving a CFTC subpoena. The first thing to note is that all subpoenas issued by the CFTC are civil subpoenas. In other words, they are issued to an individual or business that may or may not be accused of a violation of the Commodity Exchange Act or any CFTC rules and regulations in a civil proceeding. But aware of the fact that the CFTC can share whatever documents or information it gathers with criminal prosecutors and other agencies. What is a CFTC Subpoena? A CFTC subpoena is a document issued by the Commodity Futures Trading Commission (CFTC) that requires a person or entity to provide information or documents to the CFTC. The subpoena is a formal order from the court to produce documents, data, or both. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. IMPORTANT: The CFTC will not inform you whether you are a target, subject, or witness. In fact, the CFTC attorneys and investigators will tell you nothing about the investigation! This is why the first thing you should do if you receive a subpoena from the CFTC is contact an experienced CFTC defense attorney. A lawyer can help you decide how you are going to respond to the subpoena. Although there are several ways to proceed, a lawyer can recommend the best course of action based on your specific circumstances and reduce your chances of making a procedural misstep that will result in a more aggressive investigation by the CFTC or worse. CFTC Enforcement Actions If you do not produce the documents, or if you fail to comply in another way outlined by the subpoena, then you could be facing an enforcement action. The usual course of an enforcement action is for the CFTC prosecuting attorneys to file a complaint with the federal district court where your business is located. What happens next could include the filing of a complaint with the federal district court where you or your business is located. The filing will contain a proposed order for the court to enter. The order will direct you to produce specific documents and information, and inform you if you do not comply with the order you may be held in contempt of court and put in jail until you comply. If you receive a subpoena from the CFTC, be sure to contact an experienced lawyer right away! CFTC’s Information Gathering Process As a general matter, it is important to know that the CFTC has very broad powers when it comes to investigating suspected violations of the Commodity Exchange Act. Specifically, the CFTC can issue subpoenas to a person or entity for any records related to its investigation. The compelled production must be made within the date stated on the subpoena. The CFTC can be quite aggressive in investigating suspected violations of the Commodity Exchange Act. This investigation can include issuing subpoenas for documents and testimony as noted, as well as using the depositions of those who appear or testify before them in court. They may also issue subpoena duces tecum orders to require production of books, records, papers and other data that they believe might be relevant to their investigation. This means that anybody could be served with a subpoena if the CFTC believes that you have relevant information in your possession. The CFTC has very broad powers when it comes to enforcing subpoenas issued by them. For instance, they can issue a civil investigative demand to require an individual or entity produce for inspection and copying all records relating to any transactions or activities related to any agreements, contracts, or transactions in any commodity. The CFTC can also issue an administrative subpoena to require that someone appear before them to testify under oath about the production of documents and records. Do not assume that because you are only served with a subpoena for documents, that this is all you have to worry about. You may be subject to a deposition or some other form of testimony at some point during the investigation. It is important to know that, as an individual or entity being investigated by the CFTC , you have a right to counsel present at any hearings on enforcement matters. Steps to Take When Receiving a CFTC Subpoena When you receive an administrative subpoena issued by the CFTC, it is important to take certain steps that can greatly reduce your risk. These include: Given the complexity and number of necessary action steps involved with responding to a CFTC subpoena, individuals and firms without experienced legal representation are often at a severe disadvantage. Schedule a Free Initial Consultation with Attorney that Can Handle Your CFTC Issues The Law Offices of Robert Wayne Pearce, P.A. have successfully defended clients involved in CFTC subpoenas, informal inquiries, formal investigations and enforcement actions since the mid-1980s. We have faced the CFTC in its many sweeps of Commodities Option brokerages, Off-Shore FOREX companies, Leveraged and Cash-only Precious Metals firms, Futures Commission Merchants and small Introducing Brokerage firms. We are here to help you and your firm. For dedicated representation from a CFTC defense attorney with substantial experience in all aspects of CFTC investigations and enforcement proceedings, contact us online or call our law firm at 800-732-2889.

Mar 3, 2023

What are Options in the Stock Market?

There are many different investing tactics and strategies that brokers leverage to generate returns on the stock market. Among these are options, which are a type of derivative security. For the common investor, understanding exactly what are options in stocks may leave you scratching your head. In this guide you’ll learn: So if you are ready to learn more about options, you have landed on the right page. Let’s get started. What are Options? Options are a type of derivative security that gives the holder the right, but not the obligation, to buy or sell an underlying asset (such as a stock, commodity, or currency) at a specified price (known as the strike price) within a certain period of time. For the average investor, understanding options can be complicated and intimidating. Despite this, some brokers still partake in the purchase and sale of options for their clients without properly warning them about the risks involved. Options trading is both complex and risky and may be considered unsuitable for many investors. When you (or your broker) buy an options contract, it gives you the right, but not the obligation, to make the purchase or sale at the agreed-upon price. This means that the price of the options contract is connected to the price of the underlying asset. If you think the price of the underlying asset will go up or down, you can buy an options contract to potentially profit from that change without actually owning the asset. IMPORTANT: Options trading is highly speculative in nature and can carry a substantial risk of loss. As such, this type of trading is not suitable for all investors. Investors who have lost significant amounts of money in options trading have been known to sue their brokers for failing to properly inform them about the risks involved. It is important to note that, unlike stocks, there is no actual physical “exchange” of the underlying asset when an options contract expires; rather, your broker will simply adjust your account balance accordingly (or not). The Types of Options: Calls and Puts There are two types of options: call options and put options. A call option gives the options contract holder the right to buy an underlying asset at a specified price (known as the strike price) within a certain period of time while a put option gives the holder the right to sell an underlying asset at a specified price within a certain period of time. What is a Call Option? A call option gives the owner of the contract the right to buy an underlying asset at a certain price (known as the strike price) within a specific period of time. If the underlying asset increases in value above the strike price by the time of expiry, the option buyer will make a profit from the difference. To purchase a call option, the buyer must pay a premium (the cost of the option). The buyer has no obligation to buy the underlying asset at any time; they can simply let the option expire. If the call option expires, the buyer will lose the money (premium) they paid for the option. With call options, you’re ultimately betting that the price of the underlying asset will climb in value over time. Understandably, this carries a certain degree of risk and speculation. What is a Put Option? A put option gives the owner of the contract the right to sell an underlying asset at a certain price (the strike price) within a specific period of time. If the underlying asset decreases in value below the strike price by the time of expiry, the option seller will make a profit from this difference. To purchase a put option, the buyer must pay a premium (the cost of the option). If you own put options, it is in your best interest for the stock price to decrease below the strike price. In this event, whoever sold you the option must purchase shares from you at a value higher than what they are currently being traded on the market – granting you a profit and providing an insurance policy against drastic depreciation of worth. If, instead, the market price increases rather than decreases, your shares will have gained value and all you’ll be out is the cost of the put premium. In this case it’s best to allow your option to expire. The Risks of Options Trading While the intent behind purchasing options is to increase the potential for profits, it’s important to understand that the potential for losses is just as real. Options trading is highly speculative in nature and can carry a substantial risk of loss. Some option strategies are nothing short of gambling and carry immense risk. An example of this would be the sale of a naked (uncovered) call or put option. When a call is exercised it gives the purchaser the right to buy shares at a set price (the strike price) within a certain time period independent of whether or not the investor is currently in possession of the underlying asset. If the option is exercised and the shares are not owned, then the seller of the option must purchase them in order to fulfill their obligation, regardless of how high the price of the underlying asset has risen. In the worst-case scenarios, these losses can be catastrophic and wipe out an entire trading account in a single trade. Did Your Broker Make Unsuitable Recommendations Based on Your Risk Tolerance? Not all brokers take the time to understand their clients’ needs, preferences, financial situation and risk tolerance levels. As a result, these brokers may make unsuitable recommendations regarding investments and strategies in options trading. If you have investment losses because your broker recommended unsuitable options trading strategies, you may have a valid claim to recover your losses. Contact an experienced investment fraud lawyer to discuss your legal rights and options.

Mar 2, 2023

How to File a SEC Complaint or Report Fraud Against a Broker

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 an SEC 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. Please don’t hesitate to send us an online message or call (800) 732-2889 today for assistance. 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: 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: 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 to the SEC 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, it is imperative that you contact an attorney to help you fight for the recovery you need and deserve. An experienced investment and securities fraud attorney or FINRA arbitration lawyer can help you evaluate your case and determine how best to move forward. At the end of the day, reporting...

Feb 28, 2023

What is FINRA Arbitration? Disputes, Process, and Guide

This is your definitive guide to FINRA arbitration in 2023. In this article you will learn: how disputes are handles under FINRA arbitration, the FINRA arbitration process, and what to expect if you are involved in a FINRA arbitration case. We will also cover the most important information that you will need to know about FINRA arbitration in 2023 so that you can be prepared if you find yourself involved in a case. What is FINRA Arbitration? FINRA arbitration is a forum for resolving disputes between investors and their brokerage firms or brokers, outside of court. It involves presenting evidence and arguments to a panel of arbitrators, who make a binding decision, called an award, on the dispute. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. As an investor, if you have suffered considerable investment losses caused by the behavior of your broker, then FINRA arbitration may be a viable solution. By filing for arbitration with FINRA, you could be entitled to recoupment or compensation from the brokerage firm responsible. It is highly recommended by FINRA that all investors seek the advice of a qualified FINRA attorney before filing for arbitration. FINRA Overview FINRA, the acronym for Financial Industry Regulatory Authority, governs disputes between investors and brokers and disputes between brokers. In this article, we solely concentrate on how an individual private investor files a claim to recover losses against their broker or financial advisor. We will explain how FINRA fits into the securities regulatory scheme. We will discuss how FINRA provides services designed to resolve disputes in a cost-effective manner that is quicker than a traditional court and give some insight into how FINRA‘s arbitration procedure works. Next, we will examine the pros and cons of FINRA arbitration. Lastly, we will discuss how a highly experienced lawyer who has represented numerous clients successfully at FINRA arbitration can help you recover your damages from your broker or financial advisor. What Is FINRA? FINRA is not a government agency. Unlike the Securities and Exchange Commission (SEC), FINRA is an organization established by Congress to oversee the brokerage industry. FINRA is a self-governing body and operates independently from the U.S. government. By contrast, the SEC more broadly regulates the buying and selling of securities on various exchanges such as the New York Stock Exchange, NASDAQ, and the American Stock Exchange. The SEC approves initial public offerings and secondary offerings and can halt trading to avoid a crash if necessary. Additionally, the SEC has law enforcement powers. Along with the FBI and the U.S. Attorneys Office, the SEC can investigate acts surrounding the buying, selling, and issuing of securities. The U.S. Attorney can pursue charges for crimes relating to the stock market, such as insider trading and wire fraud. While the SEC has the authority to file civil lawsuits against any person or organization violating the securities statutes and the SEC’s rules. How Is FINRA Different from the SEC? FINRA has a different function than the SEC altogether. FINRA is a regulatory agency designed to promote public confidence in the brokerage industry and the financial markets as well. People will not invest if they believe they have trusted unscrupulous financial advisors to protect their economic interests. FINRA ensures that its members comply with the ethical rules of their profession, similar to a state bar for attorneys or a board of registration for medical professionals. Congress granted FINRA authorization to investigate complaints investors make concerning misconduct, fraud, or potentially criminal behavior. As a result, FINRA can discipline its members if the agency determines that a broker violated its professional code. FINRA can assess fines, place restrictions on a broker’s authority, or expel the member from its ranks for an egregious violation. Anyone who suspects their broker or their financial advisor of wrongdoing should file a complaint with FINRA’s complaint center for investors. You should be aware that FINRA’s rules do not restrict you from filing a complaint seeking an investigation into wrongdoing and pursuing monetary damages in arbitration. FINRA Alternative Dispute Resolution FINRA provides a forum for investors to resolve their disputes with their brokers or financial advisors. In fact, FINRA boasts the largest securities dispute resolution forum in the US. FINRA offers arbitration services, as well as mediation services, as a means to avoid costly and inefficient litigation in courts. FINRA provides a fair, effective, and efficient forum to resolve broker disputes. FINRA’s goal is to settle disputes quickly and efficiently without the standard procedural and discovery requirements that bog down cases filed in courts. How Does Arbitration Work with FINRA? Arbitration is an alternative to filing a case in civil court. Arbitration tends to be less formal and is designed to process claims more quickly than filing a lawsuit in court. FINRA’s arbitration process involves resolving monetary disputes among brokers and investors. FINRA’s arbitrators can issue monetary judgments and have the authority to order a broker to deliver securities to you if that is a just resolution of the case. An arbitration hearing is similar to a trial in court. The parties admit evidence and argue their side to a neutral person or panel of arbitrators who will decide the case. The arbitrator’s decision, called an award, is the judgment of the case and is final. You should know that you do not have the right to appeal the award to another arbitrator. You may have an opportunity to pursue an appeal in court under limited circumstances. However, you cannot elect to arbitrate your case and then file a complaint in court seeking a trial on the issues decided by the arbitrator. FINRA’s arbitration forum operates under the rules set forth by the SEC. FINRA ensures that the platform serves as it should and facilitates ending disputes. No member of FINRA participates in the arbitration. FINRA merely provides the forum and enforces the rules. Arbitrators decide the cases. The arbitrators typically need about 16 months to issue an award. This is a lot quicker than court, where cases...

Feb 2, 2023

Can a Lawyer Help Investors with Unauthorized Trading?

The Law Offices of Robert Wayne Pearce, P.A. has experience handling unauthorized trading and investor disputes with broker-dealers. Our unauthorized trading lawyers understand the complexities of securities law, as well as the impact that unauthorized trading can have on an investor’s financial future. Brokers must get approval from clients before making trades in a standard brokerage account. When a broker makes a trade (or trades) without first discussing this with their client, this is known as unauthorized trading. If you’ve been a victim of unauthorized trading and suffered financial losses, there is hope – you may be able to recover your money. But you must call us at (800) 732-2889 promptly to avoid ratification and waiver defenses the financial advisors lawyers will raise to avoid paying you back! What is unauthorized trading? Unauthorized trading is any purchase or sale of securities made on behalf of a client without prior permission, knowledge or consent. FINRA Rule 2510(b) prohibits brokers from buying or selling securities in non-discretionary brokerage accounts without talking to customers and getting their approval. This may also be considered a violation of FINRA’s standards for commercial honor, fair trade practices, and prohibitions against manipulative or fraudulent behavior (FINRA Rule 2010 and FINRA Rule 2020). Unauthorized trading doesn’t apply to discretionary accounts. A discretionary account is an account in which the broker has been granted authority (prior written authority) to make decisions regarding investments and the brokerage firm has approved the account for discretionary trading. How to Spot Unauthorized Trading To prevent unauthorized trading, it’s important to stay on top of your investment account. Here are some tips to help you spot it: Remember, the quicker you report unauthorized trading, the stronger your case will be. So don’t hesitate to take action if you suspect something’s amiss. Have You Suffered Investment Losses Due to Unauthorized Trading? If you think your broker made unauthorized trades, it’s important to act. A securities lawyer can help you understand the situation and figure out the next steps. Contact us today at (800) 732-2889 or fill out one of our short contact forms. Can You Sue Your Broker for Unauthorized Trading? Yes, you can sue your broker for unauthorized trading. Investment loss claims are most often addressed through arbitration, which is governed and regulated by FINRA. The FINRA arbitration process allows investors to resolve disputes with their brokerage firms without having to go to court. The arbitration process tends to be faster and less expensive than a traditional lawsuit. If you’ve suffered financial losses due to unauthorized trading, our experienced securities attorneys can help you file a claim against the broker-dealer. We are here to fight for your rights as an investor. Contact us today for more information. Related Read: Can You Sue a Financial Advisor or Stockbroker Over Losses? Do You Need an Unauthorized Trading Lawyer? It is crucial to have an attorney who understands the complexities of securities law, as well as the rules that brokers must abide by when dealing with clients’ accounts. Making the wrong choices now could result in losing your ability to recover any losses. A good unauthorized trading attorney knows how to avoid the ratification and waiver defenses! At the Law Offices of Robert Wayne Pearce, P.A., our attorneys understand how difficult it is for investors when brokers breach their fiduciary duty and make unauthorized trades. We are here to help you get the compensation that you deserve for your losses. We’ve been helping investors recover lost money for over 40 years. Our track record speaks for itself. We’ve helped recover over $170 million for our clients. Contact the Law Offices of Robert Wayne Pearce, P.A. today to learn how we can help you with your unauthorized trading dispute. We provide free consultations, so don’t wait – schedule yours now and get the legal help you need.

Jan 25, 2023

What is Stockbroker Fraud?

Stockbroker fraud is, unfortunately, all too common. Investors typically understand that there is always some risk when investing in the stock market. However, what they don’t expect is for their broker to intentionally deceive them and engage in illegal activities to make a profit. Brokers are strictly regulated by the Financial Industry Regulatory Authority (FINRA) and must adhere to a fiduciary standard when providing advice to their clients. When a stockbroker fails to act in the most beneficial manner for their client, they may be participating in unlawful activity known as stockbroker fraud. What is Stockbroker Fraud? Stockbroker fraud is any act committed by a broker or financial advisor that violates the securities laws or their fiduciary duty to their client, generally in an effort to gain profits for themselves or their firm. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. There are many different ways a stockbroker may violate their legal and ethical obligations towards their clients. If a broker commits securities fraud, their employer – which is often a large brokerage firm – will be held accountable for any losses the client suffers. 12 Common Types of Stockbroker Fraud Below are the most common examples of stockbroker fraud and other stockbroker misconduct: Recommending Unsuitable Investments Brokers have an obligation to make sure that any investments they recommend are suitable for the investor’s individual needs and objectives. If a broker recommends a high-risk investment to someone who is looking for conservative, low-risk options, this could be seen as unsuitable advice. Unsuitable investments can lead to serious losses for the investor, so it is important that brokers provide advice tailored to their clients’ individual needs and goals. Outright Theft or Misappropriation of Funds This is one of the most serious forms of stockbroker fraud. It involves a broker taking money from their client’s account without authorization and using it for their own personal gain. This could include transferring funds to accounts they control or even selling securities in the client’s account and pocketing the proceeds. There are many different ways brokers can steal from their clients, so it’s important for investors to closely monitor their accounts. If you find unusually large transactions or other suspicious activity, you should contact a stockbroker fraud attorney. Churning (Excessive Trading) Churning occurs when a broker engages in excessive buying and selling of securities in a client’s account, often for the purpose of generating commissions. While some trading activity is expected with any investment strategy, churning can be seen as irresponsible behavior that only benefits the broker while putting the investor at risk. You can often spot churning by looking for unusually high commission charges or a large number of transactions with short holding periods. Unauthorized Trading on a Client’s Account Similar to churning, unauthorized trading occurs when a broker executes trades in a client’s account without their knowledge or authorization. This is an illegal activity that can be seen as a form of theft if the broker does not have the client’s permission to act on their behalf. Unauthorized trading can also be seen as a breach of fiduciary duty, since the broker should have obtained their client’s consent before entering into any transactions. Lack of Diversification Another form of stock broker fraud is a lack of diversification. This occurs when a broker invests all or most of the client’s money in one type of security, such as stocks, bonds, or mutual funds. Diversifying an investment portfolio can help reduce risk and maximize returns, so failing to diversify a client’s investments could be seen as a breach of fiduciary duty. Misrepresenting or Omitting Information It is the responsibility of a stockbroker to provide accurate and complete information about any investment they recommend. If they fail to do so, or intentionally misrepresent the facts, this could be seen as a form of stock broker fraud. Not only that, but they must also disclose any risks associated with the investments they recommend. Failing to do so could lead to serious losses for their clients. Failing to Follow Instructions In most cases, your broker is ethically and contractually compelled to follow your directions when you’re buying or selling stock. If you instruct your broker to make a certain trade, and they fail to do so, this could be seen as a breach of their duties. In some situations, the broker won’t flat-out ignore your instructions but might attempt to persuade you into keeping a stock that you wanted to sell, for their benefit rather than yours. Failure of a broker to follow your instructions, and even improper pressure to change your instructions, can be grounds for recovering your loss. Over-Concentration of Assets Over-concentration occurs when a broker invests too much of a client’s money in one particular security or sector. This is risky, as it could cause the investor to suffer significant losses if that security or sector declines in value. Imagine if your broker recommended investing all of your money in a structured product, and then the structured product suddenly declined. You could find yourself with a margin call or a forced liquidation of your portfolio. Failure to Disclose a Personal Interest in a Security Brokers owe their clients a duty of disclosure, meaning they must disclose any personal interest they have in security before recommending it. Imagine if your broker recommended that you invested in a certain stock only for you to later find out they had a majority ownership stake in the company. Of course, you would be upset. You have a legal right to expect your broker to put your interests first. Failing to disclose their personal stake in the security could be seen as a breach of fiduciary duty and constitute stock broker fraud. Negligent Portfolio Management A big reason you hired a broker in the first place was to get professional advice on how to manage your investments. If the broker fails to follow through on their duties and takes actions that are deemed negligent, this could be seen as a form of stockbroker fraud. When it...

Jan 25, 2023

What is FINRA Rule 3210?

FINRA Rule 3210 is a newer FINRA rule, approved by the U.S. Securities and Exchange Commission (SEC) in the Spring of 2016 and rolled out the following year. The regulators’ goal in approving this rule was to prevent conflicts of interest by financial advisors and broker-dealers. To carry out this goal, the rule governs the ability of registered financial advisors to use investment accounts outside of the accounts offered by their FINRA member firm. At the Law Offices of Robert Wayne Pearce, P.A., we are committed to helping you enhance your investor education and understand all the FINRA-registered broker-dealer rules that may impact your decision-making. What is FINRA Rule 3210? FINRA Rule 3210 requires all employees to notify their employers if they intend to open or maintain an investment account at a competing financial firm. Rule 3210 governs accounts opened by members at firms other than where they work. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. FINRA Rule 3210 also imposes conditions on accounts opened and maintained by associated persons of members, which include spouses, children, and other family members of the employee. IMPORTANT: Understanding rules like FINRA Rule 3210 can help you become a well-informed investor. It may also help you know what to look for when selecting a brokerage firm or a registered financial professional. FINRA Rule 3210 Broker Dealer Overview When an individual works for a brokerage firm, they typically keep their assets at that firm. The firm is therefore able to monitor their trades and can ensure that the financial advisor is not frontrunning their clients in a personal brokerage account. The firm can also monitor the financial advisor’s account for insider trading or other bad activity. But what happens when the financial advisor works for Bank A but wishes to keep their accounts at Bank B? Rule 3210 specifies that the financial advisor must receive written permission from Bank A to open the account at Bank B. Not only may the financial advisor not open the account without permission, but they must also declare any account in which they have a “beneficial interest.” This means that if their spouse has a brokerage account at Bank B, they must disclose that to their employer as well. These FINRA-registered broker-dealer rules may seem challenging at first. However, they have been carefully implemented to protect investors from financial advisor conflicts of interest. Your Financial Advisor’s Requirements Under Rule 3210 Rule 3210 is not merely about allowing your financial advisor’s employer to see what is in their account. It is primarily about preventing conflicts of interest. In doing so, the rule requires: An important part of this rule is the written consent part. Everything must be in writing under Rule 3210. Indeed, keeping written records is a requirement under most FINRA-registered broker-dealer rules. Maintaining a record of requests and consents is important in this case because Rule 3210 pertains to conflicts of interest. FINRA does not have a set form for requests and consents under Rule 3210. Each firm creates its own FINRA Rule 3210 letters. The FINRA 3210 Letter Rule 3210 requires financial advisors to make a request and obtain consent from the FINRA member firm they work for to keep their accounts somewhere else. It also requires a disclosure letter to the outside firm when a securities industry professional opens an account. This disclosure action is sometimes referred to as a FINRA 3210 Letter. Making this disclosure is one important step in preventing conflicts of interest for either firm. Even more important than consent may be the fact that a financial advisor must submit duplicate brokerage statements to their employer. A financial professional may have their brokerage accounts at an outside firm. However, their employer must have transparency into their account activity just as if the accounts were in the employer’s custody. Rule 3210 is essential in balancing the right of financial professionals to use whichever brokers they choose with an employer’s need for compliance and a client’s need for transparency. Close Family Members Must Also Comply with FINRA 3210 It may seem hard to believe that a FINRA broker dealer rule might apply to someone who doesn’t work in the financial services industry. But it’s true—FINRA 3210 requires disclosure of accounts from the following people related to a registered financial industry professional: In the event that both spouses work at FINRA member firms, then each spouse would have to comply with this rule. Both member firms would be notified about the other spouse’s accounts. Protecting Against Conflicts of Interest A primary goal of FINRA Rule 3210 is to prevent FINRA member conflicts of interest. Your financial advisor and your brokerage firm should be working for you, in your best interest. Where an undisclosed conflict is lurking, your broker simply cannot provide you with the advice or level of service you should expect. An important part of investor education about FINRA broker dealer rules is to allow you to understand the issues behind rules like FINRA 3210. Being well-informed about what these rules are and how they work helps make you a savvy investor. You will be better equipped to ask questions about potential conflicts of interest. You will also know to ask about your brokerage firm’s compliance systems and record retention. Related Read: What Constitutes a Breach of Fiduciary Duty? Concerned That a Conflict of Interest Has Led to Investment Loss? If you are concerned that a conflict of interest caused you investment loss, we are here to fight for your rights. When you engage an investment advisor or a brokerage firm, you expect the highest level of service. When these professionals fail to act in your best interest, they should be held accountable. Learn how you can file a formal FINRA complaint against your advisor. At The Law Offices of Robert Wayne Pearce, P.A., our practice focuses on all manner of investment-related litigation, FINRA arbitration, and dispute resolution. Our FINRA arbitration lawyers have the expertise and savvy to take on...