Financial advisors are highly trusted professionals who help make decisions that impact your economic future. You trust them with your hard-earned money, your savings, and your retirement. But the guidance and advice they offer can shape your financial life for decades, which is why their misconduct hits so hard.
When that trust is broken through a bad or negligent act, the investor suffers, and the financial advisor must be held accountable.
When you’re looking at your investment losses, in the worst-case scenario, you may be asking yourself if a financial advisor can steal your money.
Can Financial Advisors Steal Your Money?
Yes, an unethical financial advisor can be in a position to steal money from you, especially if you have given them direct access to your investment account. This applies if you’re working with an independent financial advisor or even one tied to a larger company.
Stealing from a client is a federal crime. Financial advisors who take your money without authorization can face charges under securities fraud laws, wire fraud statutes, and the Investment Advisers Act of 1940.
Because of this, a vast majority of reputable financial advisors never take ownership of your money to protect your best financial interests.
But if this happens to you, you can file a complaint with the SEC, report the advisor to FINRA, or go through arbitration to recover what you lost. Some cases even qualify for civil lawsuits where you can recover more than just the stolen amount.
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It is recommended that you always keep control over your investments and never give any financial advisor full discretion over your accounts.
Giving an advisor direct access allows them to steal money with ease. Avoid doing so unless you’re 100% confident in the individual you’re dealing with.
Note: If you believe your financial advisor stole your money, we recommend speaking with an experienced investment fraud lawyer to learn more about your rights and how you may recover your losses
What to do if You Believe Your Financial Advisor is Stealing Your Money
If you’re worried your financial advisor is stealing from you, act fast to get better chances of recovering your money.
Here’s what to do:
- Pull your account statements, emails, and any transaction records you have access to.
- Freeze or transfer your accounts immediately.
- File a complaint with FINRA and the SEC.
- Contact your advisor directly in writing, then talk to a securities attorney.
What is Fiduciary Duty?
All financial advisors are held to a standard of care when dealing with investors. Registered financial advisors have a higher fiduciary duty to their clients under the Investment Advisers Act of 1940.
This is the highest legal standard of care and requires financial advisors to act in the best interest of their clients, make suitable investment decisions, and disclose relevant information to you. This covers everything from financial planning and retirement planning to tax planning and investment management. Your advisor is supposed to manage your portfolio on your behalf in line with your financial goals and recommend an investment strategy that fits your situation.
Knowing whether your financial advisor is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator is important because if the advisor breaches the fiduciary duty, you can bring a claim against the financial advisor through the Financial Industry Regulatory Authority (FINRA).
FINRA is the governing organization that creates and enforces rules for advisors and their firms and assists in resolving disputes between advisors and investors.
Do You Have a Claim?
If your financial advisor outright stole money from your account, this is theft. These cases involve an intentional act by your financial advisor, such as transferring money out of your account. However, your financial advisor could also be stealing from you if their actions or failure to act causes you financial loss.
Many investors lose money through bad markets, and that alone isn’t enough to file a claim. Remember, there is no guarantee of return when investing.
Even if your financial advisor made the recommendation and promised positive returns, under federal securities law and FINRA regulations, you cannot hold your advisor liable simply because they lost you money. You need a viable cause of action, such as a breach of fiduciary duty, negligence, or malpractice.
Investment Losses? We Can Help
Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.
or, give us a ring at (800) 732-2889.
Types of Claims Against Your Financial Advisor
Understanding securities law and FINRA regulations is important to knowing whether you have a valid claim against your financial advisor.
The investment loss recovery attorneys at The Law Offices of Robert Wayne Pearce P.A. have over 45 years of experience in securities and investment law. They have helped countless investors recover their financial losses caused by bad or negligent acts by their financial advisors.
Negligence
In a negligence claim, you do not need to show that the financial advisor intentionally acted in a harmful way, but rather that the advisor failed to do something they had an obligation to do and caused the economic loss.
For example, your advisor may have made an unsuitable investment by failing to take into consideration your risk tolerance. If you lost money based on the recommended investment, it may be appropriate to file a claim for negligence against your financial advisor.
Breach of Fiduciary Duty
A financial advisor who breaches his fiduciary duty has failed to meet the required standard of care. You may have a valid claim for breach of fiduciary duty if your advisor failed to execute your stated objectives or did not disclose information about a product. Your broker dealer can also be held liable if they failed to catch or stop the misconduct.
Other examples of breaching the fiduciary duty include:
In each of these instances, the financial advisor did not act in your best interest.
Failure to Supervise
A brokerage firm is responsible for supervising the actions of its financial advisors and any other employees. If the firm fails to do this, it can be held liable for your financial losses.
Warning Signs of Financial Advisor Misconduct
There are several warning signs that your advisor may not be acting in your best interest. Watch out for these red flags:
- You can’t access your account statements. If your advisor delays, deflects, or gives vague answers when you ask for records, that’s a problem.
- Your returns don’t match the market. Consistently high returns with zero risk are a classic sign of a Ponzi scheme.
- They pressure you into quick decisions. Legitimate advisors give you time to think. Rushing you is a tactic to skip your due diligence.
- You notice unauthorized transactions. Any trade or withdrawal you didn’t approve is a serious red flag.
- They ask you to write checks in their name. Your money should go to a custodian, never directly to your advisor.
- They avoid putting things in writing. If calls and meetings never result in documented follow-up, be cautious.
- Your account is churning. Excessive, frequent trades can mean your advisor is generating commissions at your expense.
- Their fees don’t add up. Whether they charge a flat fee or take a percentage, their compensation structure should be transparent.
- They push unnecessary products. If they keep pushing you to move money across your retirement accounts or change your investment management setup without a clear reason tied to your financial goals, be suspicious.
What You Can Do if You’ve Been the Victim of Fraud
There are several stages of resolution to recover your financial losses. Depending on your case, you may be able to pursue damages beyond just the stolen amount. Keep in mind that legal fees can add up fast in litigation, which is why mediation and arbitration often cost less and take less time.
The attorneys at The Law Offices of Robert Wayne Pearce P.A. have helped investors in all stages and have successfully recovered over $175 million in losses for our clients. Contact us today so we can help you with your situation.
Review Customer Agreement
If you believe your financial advisor stole money from you, either directly or indirectly through losses in your account, you should first review your customer agreement. Understand what sort of authority you gave your financial advisor and if there is a mandatory arbitration clause.
This clause is common in most customer agreements with brokerage firms. These clauses often state that you waive your right to file a lawsuit against your advisor and agree to engage in a FINRA arbitration proceeding instead.
What Should You Do Immediately If You Suspect a Financial Advisor Stole Money?
What you should do immediately if you suspect a financial advisor stole money is to secure the account and create a paper trail before you argue the claim in arbitration or court. At the Law Offices of Robert Wayne Pearce, P.A., we have seen fast action reduce further losses because theft often happens through repeated disbursements, new payees, or changed login credentials.
First, call the firm’s compliance department to place account restrictions, revoke any trading or money-movement authority, and demand written confirmation of every recent wire, ACH, check, or journal transfer. A disbursement is the movement of client funds, and a temporary disbursement hold is a firm-level pause used when exploitation is suspected, especially for older or vulnerable investors.
Next, verify who you were really dealing with: BrokerCheck is a public background tool for brokers and firms, and the SEC’s IAPD is a public database for registered investment advisors. Document requests, screenshots, statements, and communications because evidence equals leverage when you later prove conversion, unauthorized activity, breach of fiduciary duty, or failure to supervise.
Informal Dispute Resolution
Claims against financial advisors are incredibly complex legal matters. There are informal options available, however. Even at this stage, you should contact an investor loss recovery attorney for assistance. FINRA, which regulates the investment industry, instructs investors to first pursue informal dispute resolutions before filing a claim against their financial advisor.
Depending on the severity of the financial advisor’s misconduct, you may be able to resolve the matter directly with your advisor or the firm’s compliance department. If this is not suitable or you fail to come to a resolution, the next stage is participating in voluntary, non-binding mediation.
FINRA Mediation
Mediation is a voluntary process that involves a neutral third party who assists in reaching a mutually agreeable solution. FINRA offers a forum for advisors and investors to mediate.
This option is faster and less expensive than arbitration and litigation. Four out of five cases mediated by FINRA are resolved. If you fail to reach a satisfactory solution through mediation, you still have the right to arbitrate or litigate.
FINRA Arbitration
Arbitration is more like a traditional legal proceeding in that an impartial party or panel hears arguments from both sides, analyzes the facts and evidence, and makes a final, binding decision.
If you choose arbitration or are required to arbitrate under your customer agreement, you forfeit your right to file a lawsuit. Courts of law can review an arbitration award for fairness, but typically, they will not overturn an award.
There is a statute of limitations to bring a claim against your financial advisor. Under FINRA Rule 12206, you have six years from the time of the financial advisor’s act to take action. However, Florida has a four-year statute of limitations for negligence claims. Contact an experienced investor loss recovery attorney who has experience in your area (Florida, Texas, etc.) as soon as you suspect that your advisor has caused you financial loss.
File a Lawsuit
If there is no mandatory arbitration clause in your customer agreement, you may file a lawsuit in court against your financial advisor. This is a lengthy and costly option. Speak with our investor fraud attorneys to weigh the pros and cons of mediation, arbitration, and litigation.
How The Law Offices of Robert Wayne Pearce Can Help
We are here to protect your rights as an investor. If your financial advisor stole your money or caused you to lose money through negligence or misconduct, we can help you recover.
For over 45 years, the attorneys at The Law Offices of Robert Wayne Pearce have helped hundreds of investors navigate FINRA mediation and arbitration proceedings.
We know the laws, rules, and regulations for bringing a successful claim against a financial advisor for investors’ financial losses. Contact us or call 561-556-2927 or toll-free at 866-489-9402 for a free initial consultation.
Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for over 45 years and his securities law firm focuses primarily on helping investors recover losses from investment fraud while also defending financial professionals in regulatory actions and employment disputes within the securities industry. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.
