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Pearce Law Firm Client Wins $2.55 Million Against Investment Advisor

This was a sad case of financial abuse by an ex-spouse of another taken to arbitration by Robert Pearce and Adam Kara of The Law Offices of Robert Wayne Pearce, P.A.  (the “Pearce Law Firm”) for one of its clients. The Pearce Law Firm represented Elizabeth Snyder who filed claims against her ex-husband, Barry Snyder, for allegedly mismanaging her investment accounts through highly speculative, excessive and unsuitable trading strategy when he was employed as her stockbroker and later when he acted as her investment adviser at Glenwick Capital Holdings, LLC. In the Spring of 2015, in breach of his fiduciary duties as an investment adviser, Mr. Snyder allegedly misrepresented that Mrs. Snyder needed to transfer almost all of the Snyder Trust to a new investment vehicle, Linkster Holdings, LLC, for estate planning purposes when Mr. Snyder was about to be fired and become unemployable in the securities industry and setting up a “family office” to avoid registration with the regulators.  No one told Mrs. Snyder that he was fired and under investigation for misconduct even though he still continued to manage her accounts with the assistance of other employees at his former employer’s brokerage firm. Shortly after being terminated at that brokerage firm, Mr. Snyder caused Claimants’ accounts to be transferred to Montecito Advisors, Inc. and another brokerage firm where he allegedly crushed Mrs. Snyder financially through the same highly speculative, excessive and unsuitable at those brokerages.  Within a few short months, Mrs. Snyder’s life savings were wiped out. Mrs. Snyder alleged that Mr. Snyder’s actions were in contravention of his “fiduciary duty”  to act in his investment advisory clients’ “best interest” and industry standards of conduct such as FINRA Rules of Conduct 2110, 2111 (f/k/a 2310), and 2120, which state: 2110. Standards of Commercial Honor and Principles of Trade A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade. 2111. Suitability (a) A member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.  A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation.                                  * * * 2120.      Use of Manipulative, Deceptive or Other Fraudulent Devices No member shall effect any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.                                  * * * Mr. Snyder’s recommendations and trading in Mrs. Snyder’s accounts were allegedly breaches of FINRA’s suitability rule, which has long been applied to recommended “investments” and “investment strategies.”  Mr. Snyder allegedly misrepresented the “investments” and “investment strategies” to Mrs. Snyder as safe and suitable.  The over-concentration, over-leverage, and excessive risks taken in the accounts were allegedly not fully disclosed to Mrs. Snyder until it was too late. Mr. Snyder’s acts and omissions not only allegedly violated his fiduciary duties, the FINRA standards of commercial honor and principles of trade, but also included the alleged use of manipulative, deceptive, and fraudulent devices and other FINRA Conduct Rule violations. As we indicated above, Mr. Snyder lost every dollar in Mrs. Snyder’s accounts.  She was forced to sell her home, jewelry, etc. to support herself and children after the suffering the investment losses. No law firm other than the Pearce Law Firm was willing to take the case on a contingency fee basis, and we did so, successfully! The Pearce Law Firm sought an award of over $ 4,093,067 in market adjusted compensatory damages, or alternatively, $3,495,883 in net-out-of-pocket compensatory damages plus pre-judgment interest, attorney fees, expert witness fees, and costs. The arbitration award indicates the Panel was apprised of the amounts of settlements with other Respondents and requested to deduct those amounts from the compensatory damages before the award was entered. The Panel then entered an Award of $2,554,896 in compensatory damages but denied Claimants request for prejudgment interest, attorney fees, expenses, etc. Free Initial Consultation With Securities, Commodities and Investment Dispute Lawyers Serving Investors Nationwide If you have had your accounts mismanaged by Barry Snyder or any other stockbroker, investment adviser and/or trustee, and heard similar misrepresentations, received unsuitable recommendations, please call our office. The Law Offices of Robert Wayne Pearce, P.A. understands what is at stake in securities and commodities law matters and investment disputes, and works tirelessly to secure the best possible result for you and your case.  Mr. Pearce provides a complete case review, identifies the strengths and weaknesses of your case, and fully explains all of your legal options.  The entire law firm works to ensure that you completely understand the ins and outs of the legal process to give you complete peace of mind knowing that you have chosen the best possible representation for your case.

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Investors With “Blown-Out” Securities-Backed Credit Line and Margin Accounts: How do You Recover Your Investment Losses?

If you are reading this article, we are guessing you had a bad experience recently in either a securities-backed line of credit (“SBL”) or margin account that suffered margin calls and was liquidated without notice, causing you to realize losses. Ordinarily, investors with margin calls receive 3 to 5 days to meet them; and if that happened, the value of the securities in your account might have increased within that period and the firm might have erased the margin call and might not have liquidated your account. If you are an investor who has experienced margin calls in the past, and that is your only complaint then, read no further because when you signed the account agreement with the brokerage firm you chose to do business with, you probably gave it the right to liquidate all of the securities in your account at any time without notice. On the other hand, if you are an investor with little experience or one with a modest financial condition who was talked into opening a securities-backed line of credit account without being advised of the true nature, mechanics, and/or risks of opening such an account, then you should call us now! Alternatively, if you are an investor who needed to withdraw money for a house or to pay for your taxes or child’s education but was talked into holding a risky or concentrated portfolio of stocks and/or junk bonds in a pledged collateral account for a credit-line or a margin account, then we can probably help you recover your investment losses as well. The key to a successful recovery of your investment loss is not to focus on the brokerage firm’s liquidation of the securities in your account without notice. Instead, the focus on your case should be on what you were told and whether the recommendation was suitable for you before you opened the account and suffered the liquidation.

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FINRA Arbitration: What To Expect And Why You Should Choose Our Law Firm

If you are reading this article, you are probably an investor who has lost a substantial amount of money, Googled “FINRA Arbitration Lawyer,” clicked on a number of attorney websites, and maybe even spoken with a so-called “Securities Arbitration Lawyer” who told you after a five minute telephone call that “you have a great case;” “you need to sign a retainer agreement on a ‘contingency fee’ basis;” and “you need to act now because the statute of limitations is going to run.”

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A Stockbroker’s Introduction to FINRA Examinations and Investigations

Brokers and financial advisors oftentimes do not understand what their responsibilities and obligations are and what may result from a Financial Industry Regulatory Authority (FINRA) examination or investigation. Many brokers do not even know the role that FINRA plays within the industry. This may be due to the fact that FINRA, a self-regulatory organization, is not a government entity and cannot sentence financial professionals to jail time for violation of industry rules and regulations. Nevertheless, all broker-dealers doing business with members of the public must register with FINRA. As registered members, broker-dealers, and the brokers working for them, have agreed to abide by industry rules and regulations, which include FINRA rules.

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FINRA Know Your Customer Rule and Investment Suitability—How Does it Apply to You?

FINRA regulates the conduct of brokers in the securities industry to protect investors from suffering losses due to financial advisor misconduct. The agency formulates rules to outline the behavior expected of broker-dealers and financial advisors when dealing with their investment clients. Nevertheless, FINRA receives thousands of customer complaints every year alleging violations of FINRA Rules. FINRA Rule 2090, the Know Your Customer (KYC) rule, and FINRA Rule 2111, the suitability rule, mandate minimum knowledge requirements for brokers when making investment recommendations and commonly appear in these customer complaints.  If you suffered investment losses due to unsuitable investment recommendations, The Law Offices of Robert Wayne Pearce, P.A., can help you determine if your broker violated one of these rules. Contact our office today for a free consultation. FINRA Rule 2090: Know Your Customer Rule FINRA Rule 2090, or the Know Your Client rule, requires financial advisors to know the “essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer” when opening and maintaining a client investment account. The “essential facts” described in the rule include details that are required to: Service the account effectively; Satisfy any special handling instructions for the account; Understand the authority of anyone acting on the customer’s behalf; and Comply with applicable laws, regulations, and rules. The KYC rule protects clients from investment losses by requiring their financial advisor to learn detailed information about their personal financial circumstances. The rule protects financial advisors by outlining the essential information about customers at the outset of the relationship, prior to any recommendations. Additionally, the financial adviser receives notification of any third parties authorized to act on the customer’s behalf. The Know Your Client rule acts in tandem with the suitability rule, FINRA Rule 2111. The information learned by financial advisors through the KYC requirement factors into the analysis of whether an investment recommendation is suitable.  FINRA Rule 2111: Suitability Alleged violation of investment suitability requirements resulted in 1,220 customer complaints filed with FINRA in 2020 alone, down from 1,580 complaints in 2019. The suitability rule requires financial advisors to have a “reasonable basis” to believe that a recommended transaction or investment strategy is suitable for the customer. A financial advisor determines the suitability of a transaction or investment strategy through ascertaining the customer’s investment profile. Factors involved in a suitability analysis include the customer’s: Age, Investment experience, Financial situation, Tax status, Investment goals, Investment time horizon, Liquidity needs, and Risk tolerance. Numerous cases interpret the FINRA suitability rule as requiring financial advisors to make recommendations that are in the best interest of their customers. FINRA outlines situation where financial advisors have violated the suitability rule by placing their interests above the interests of their client, including: A broker who recommends one product over another to receive larger commissions; Financial advisors who recommend that clients use margin to purchase a larger number of securities to increase commissions; and Brokers who recommend speculative securities with high commissions because of pressure from their firm to sell the securities. Any indication that a financial advisor has placed his or her interests ahead of the client’s interest can support a claim for a violation of the suitability rule. Rule 2111 consists of three primary obligations: (1) reasonable basis suitability, (2) customer-specific suitability, and (3) quantitative suitability. Reasonable Basis Suitability Reasonable basis suitability requires a financial advisor to have a reasonable basis to believe, based on reasonable diligence, that a recommendation is suitable for the public at large. A financial advisor’s reasonable diligence should provide him or her with an understanding of risks and rewards associated with the recommended investment or strategy. A failure to comprehend the risks and rewards associated with a particular investment prior to recommending the investment to a client can result in allegations of misrepresentation or fraud. If a broker fails to perform reasonable diligence regarding either component, the financial advisor violates this obligation. Customer-Specific Suitability Customer-specific suitability involves considering the specific details about an individual customer to determine if a transaction or investment strategy is suitable. The financial advisor reviews the details outlined above to determine the suitability of a particular transaction or strategy for each customer. Quantitative Suitability The quantitative suitability element requires financial advisors to recommend transactions that are suitable when viewed as a whole, not only when viewed in isolation. This element aims to prevent financial advisors from making excessive trades in a client’s account solely for the purpose of generating commission fees. Factors such as turnover rate, cost-equity ratio, and use of in-and-out trading indicate that the quantitative suitability obligation was violated. What Constitutes “Reasonable Diligence”  FINRA’s suitability rule requires brokers to exercise “reasonable diligence” in attempting to obtain customer-specific information. The reasonableness of a financial advisor’s effort to obtain such information will depend on the facts and circumstances of each investment relationship. A financial advisor typically relies on the responses provided by the customer in compiling information relevant to the customer’s investment profile. Some situations may prevent a broker from relying exclusively on a customer’s responses, including times when: A financial advisor poses misleading or confusing questions to a degree that the information-gathering process is tainted; The customer exhibits clear signs of diminished capacity; or Red flags exist that indicate the information may be inaccurate. Additionally, the suitability rule requires brokers to consider any other information provided by the customer in connection with investment recommendations.  Hiring an Investment Loss Attorney Violation of FINRA Rules 2090 and 2111 result in significant financial losses for investors every year. If you suffered losses because of unsuitable investment recommendations, you have the right to seek compensation from the parties responsible for your losses.  Cases against brokers and registered investment advisors can be complex for attorneys without experience in securities law.  Robert Wayne Pearce has over 40 years of experience representing investors in disputes against financial advisors and broker dealers. Mr. Pearce has tried, arbitrated, and mediated hundreds of investment-related disputes involving complex securities and FINRA rule violations. In fact, Mr. Pearce serves...

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What a Securities Lawyer Does

The term “securities” encompasses several forms of financial instruments that hold some type of monetary value. Securities exist in the form of: Stocks, Bonds, Options, Notes, Certificates of interest, Collateral trust certificates, Transferable shares, and Investment contracts. Consumers and financial professionals trade securities in financial markets in an attempt to generate profits.  The law regulating securities and financial industry professionals exists to protect investors and shareholders from misconduct and enforce compliance with federal and state securities laws. Securities laws evolve rapidly to keep pace with developments in financial markets. This is where securities lawyers come in. What Does a Securities Lawyer Do? A securities lawyer specializes in securities laws and regulations that apply to investors, brokers, and financial advisors. Securities lawyers represent investors claiming losses as a result of misconduct or fraud, as well as brokers and financial advisors accused of misconduct by their clients or their employers. Investment Losses? Let’s talk. or, give us a ring at 561-338-0037. Attorney Robert Pearce has over 40 years of experience as a securities lawyer and has been named a Florida Super Lawyer through Thomson Reuters for Securities Litigation. The Super Lawyer title is awarded only to those in the top 5% in their area of law. Robert’s extensive knowledge of securities law and experience representing investors and financial professionals equip him to obtain the best results for each and every client. When Should an Investor Hire a Securities Lawyer? If you are an investor who suffered losses due to broker misconduct, you have the right to seek reimbursement from the parties responsible. Broker misconduct exists in multiple forms, including: Breach of fiduciary duty; Failure to disclose a conflict of interest; Churning, also known as excessive trading; Lack of diversification; Failure to adequately supervise; Misrepresentation; Omission of material facts; Unsuitable investment recommendations; Unauthorized trading; and  Misappropriating client funds.  While some forms of broker misconduct are easy to recognize, others are not. A financial advisor who stole funds out of your account and transferred them to a personal account clearly misappropriated your funds and committed misconduct. It’s more difficult to prove that a financial advisor recommended unsuitable investments, however, because the suitability of an investment depends on a number of different factors.  If you suffered investment losses and believe it was a result of broker misconduct, contact a securities lawyer today to evaluate your case.  The FINRA Arbitration Process FINRA is a self-governing regulatory agency charged with ensuring its members comply with the ethical rules of the financial industry and investigating investor complaints alleging misconduct and fraud. FINRA can impose fines and restrictions on brokers when necessary. Many investment contracts between brokers and investors include an arbitration provision that requires investors to file claims with FINRA. The FINRA arbitration process involves several steps, including: Filing a statement of claim; Selecting arbitrators; Participating in pre-hearing conferences and discovery; and Attending the arbitration hearing. Robert Pearce has represented hundreds of clients in the FINRA arbitration process. He is committed to obtaining the best results for his client in every case.  When Should a Financial Professional Hire a Securities Lawyer?  Brokers and investment advisors facing disputes with their brokerage firms or regulators should consider seeking the advice of a securities lawyer. We have represented investment professionals in investigations and administrative proceedings initiated by the: United States Securities and Exchange Commission (SEC); Financial Industry Regulatory Authority (FINRA); United States Commodities Futures Trading Commission (CFTC); and Certified Financial Planner Board of Standards (CFP Board). Regulatory judgments against financial professionals can result in serious consequences, including being barred from the financial industry. You should seek the counsel of a securities lawyer as soon as possible after being contacted by any securities regulatory agency.  The securities lawyers at The Law Offices of Robert Wayne Pearce, P.A., represent brokers and advisors in employment agreement disputes and in employment disputes involving discrimination. Additionally, our securities attorneys represent brokers and advisors against their employers in the event of Form U-5 Abuse, which occurs when an employer uses a Form U-5 to blackmail a former employee.  Contact The Law Offices of Robert Wayne Pearce, P.A., Today Robert has over 40 years of experience representing clients in securities disputes and has won multiple million-dollar awards on their behalf. We operate on a contingency fee basis. That means you have to pay for your legal representation only in the event of a settlement or award. When you suffer losses through no fault of your own, having an experienced securities lawyer in your corner can increase your chances of recovery. Contact our office today for a free case review.

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What is Financial Elder Abuse: The Signs You Should Look Out For

Growing up, one of the lessons we’re all taught is to respect our elders. Unfortunately, many people fail to take this to heart. Unscrupulous family members and other bad actors often take advantage of senior citizens, especially when it comes to their finances. According to one study, financial elder abuse accounted for roughly 18% of elder abuse reports. However, the actual percentage is likely much higher; only about 1 in 44 financial abuse cases is ever reported. Because many elderly people live off of their investments, the consequences of this type of abuse can be particularly extreme. The best way to protect our elderly family members is to know the signs of financial elder abuse. By recognizing the abuse as soon as possible, we can hopefully prevent irreversible damage to their finances. What Is Elder Financial Abuse? Elder financial abuse is theft or mismanagement of an elderly person’s assets. These may include real estate, bank accounts, or other property that belongs to the elderly person. Because the abuser is often a close family member, or trusted financial advisor, elder financial abuse frequently goes unnoticed. Investment Losses? Let’s talk. or, give us a ring at 561-338-0037. Sign #1: Unusual Bank Account Activity As they get older, many people grant financial powers of attorney to their spouse or adult children or trusted financial advisors. While this is perfectly normal, it opens up the possibility that the designated person may abuse that power. If you suspect elder financial abuse, pay close attention to the elderly person’s bank accounts and investments in their brokerage accounts. Withdrawals, transfers, or other suspicious activity like new or inactive accounts suddenly becoming active are red flags. The elderly person may be making these transfers themself, but it’s always good to be sure, since it could be for the wrong reasons (like the internet scams discussed below). Keep an eye on their investments as well. An elderly person’s portfolio is typically structured to provide a livable income off interest alone through low-risk investments. Keep an eye out for restructuring of investments to riskier funds or unexplained “cash outs.” Sign #2: Suspicious Internet Activity Over the past few years, there has been a drastic increase in the number of online scams targeting elderly people. Because elderly people are more trusting and less able to distinguish a scam from a legitimate venture, scammers frequently target them with fake tech support calls and the like. One of the most common online scams involves the scammer posing as a lover, friend, or family member online. After contacting the elderly victim, the scammer then requests money for plane tickets or some kind of emergency. This sign may be impossible to notice without speaking to the potential victim. Be wary if they mention someone new they met online or if you notice suspicious financial activity initiated by the victim. Sign #3: Missing Food or Unpaid Bills Ordinarily, caregivers or family members will make sure that an eldery person’s home is stocked with food and that bills are paid on time. Especially in a world with automatic bill payments, aging parents shouldn’t have to worry about paying their bills on time. A lack of food in the house and unpaid bills are indicators that that money is going elsewhere. Sign #4: Frequent Requests for Money by Someone Close to the Victim If someone makes frequent demands for money, that could be an indicator of financial exploitation. Anyone from neighbors to adult children may try to make frequent requests for money because they know the victim may have a poor memory or may have difficulty saying no.  Keep in mind that elder financial abuse like this is often subtle. Demands may not always be for large amounts of cash; this sign also includes polite requests for small amounts here and there. Over time, however, those “small amounts” can become exploitative. Sign #5: Payment for Unnecessary Services Door-to-door salesmen and “cold callers” may try to a upsell your elderly family member on services they don’t want or need. One common example of door-to-door sales abuse is roof repair or landscaping work. Cold callers barrage elderly at home with the next best investment in gold, silver, diamonds, and the next supposed Apple, Amazon, or Nextflix investment opportunity  to get into before its too late! These scams can take many different forms and may be difficult to spot. Sign #6: Threats or Coercion It may be difficult to imagine, but people may threaten their elderly family members to obtain money. These threats usually do not involve force, but rather things like, “I will put you in a home” or “I will stop visiting you.” If you don’t buy this stock, I’ll never call you again with any investment opportunities.  The abuser may also instruct the victim not to tell anyone what is happening. As a result, you’ll often have to pay close attention to spot this sign of elder financial abuse. Watch for a change in the elderly person’s demeanor or mood, especially around a suspected abuser.  What to Do If You Suspect Elder Financial Abuse If you suspect your loved one is the victim of elder financial abuse, there are a couple things you can do. If there is a health emergency, call 911 immediately; calling state adult protective services may also be appropriate in some circumstances. In most cases, your next step should be contacting a financial elder abuse attorney. They can provide legal advice and support to help stop the abuse and may be able to help the victim recover lost assets. Elder Financial Abuse and Financial Fraud Attorneys At the Law Offices of Robert Wayne Pearce, P.A., we have the experience and resources necessary to properly handle your elder financial abuse claim. We’ve helped hundreds of clients with securities and investment fraud of all kinds and are prepared to give you the professional, dedicated representation you need. Contact us today through our website or by phone at 800-732-2889 for a free consultation.

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Securities Fraud: What You Should Know as an Investor

Investors trust their financial advisors to make important and wise decisions regarding the management of their investment portfolio. Financial advisors hold a position of trust with their clients, and clients expect their advisor to act with the client’s goals in mind. Unfortunately, advisors frequently violate the trust of their clients by committing various forms of securities fraud. It is important to note that suffering losses on your investments, by itself, is not a form of securities fraud. Securities fraud involves the deception of investors or the manipulation of financial markets through illegal methods. If you suffered investment losses but don’t know if you have a claim for securities fraud, our securities fraud lawyers at The Law Offices of Robert Wayne Pearce, P.A., are ready to help. Contact us today to get started on your case. What Is Securities Fraud? Securities fraud, also known as investment fraud and stock fraud, is the deception of investors or the manipulation of financial markets through illegal methods. Investors who suffer losses as a result of securities fraud can seek to recover their losses. Investment Losses? Let’s talk. or, give us a ring at 561-338-0037. Common Forms of Securities Fraud Securities fraud occurs in multiple different ways, making it even more difficult to recognize. Victims of securities fraud often suffer steep losses as a result of the fraud. Fortunately, victims of securities fraud can seek to recover their losses. So, what is securities fraud? Below are some of the most common forms of securities fraud.  Misrepresentations and Misleading Statements Misrepresentation is the most common type of securities fraud. It involves a false statement about an investment in a company; for example, a company that supposedly has earnings, a revolutionary product, or multi-million dollar contract when it has none of those assets. Misleading statements arise by omission; such as, using the same examples, when the financial advisor fails to tell you the earnings surprise was a one time past event, the revolutionary product can’t be patented, or the multi-million dollar contract is with another company about to file bankruptcy. Undoubtedly, those missing facts would have made all the difference to you in making your investment decision. The fraudster doesn’t care, he/she lies or misleads you to just get you to part with your money so he/she makes a commission. If you relied upon that intentionally false statement or misleading statement and made that investment, you have the right to claim securities fraud under federal and state statutes as well as ordinary common law fraud. But the securities fraud statutes usually have statutory remedies, including, prejudgment interest on the full purchase price from the date of purchase and attorney fees, to fully compensate you for your loss. The only problem with securities fraud statutes is they generally come with short statutes of limitation and so, you need to act fast and file suit quickly to take advantage of them. Ponzi-Like Schemes Ponzi schemes involve promises of high returns with little risk for investors, a staple of many forms of securities fraud. However, instead of issuing returns to investors out of profits, the funds of new investors are paid to early investors. Thus, Ponzi scheme victims receive guarantees of returns regardless of market conditions.  Ponzi schemes fall apart once there are no new investors providing funds. Companies operating Ponzi schemes focus the majority of their efforts into advertising to new investors to keep the scheme afloat.  Well-known financier Bernie Madoff was convicted of running the largest Ponzi scheme in history after evidence showed that Madoff falsified trading reports to indicate clients were earning profits on investments that did not exist. Madoff received a 150-year sentence in federal prison after pleading guilty. Embezzlement Embezzlement refers to the misappropriation of assets by a person entrusted with those assets. An embezzler possesses the assets lawfully at the outset, but once the assets are used for unintended purposes, embezzlement has occurred.  For example, financial advisors placed in charge of clients’ accounts possess authority to conduct transactions in the accounts, subject to some limitations. A financial advisor who steals assets entrusted to him or her by a client commits embezzlement.  Advance Fee Schemes Advance fee schemes target all kinds of victims and are becoming more prevalent with the rise of internet scams. Con artists operating advance fee schemes require the victim to pay an “advance fee” in anticipation of receiving something—such as a service, a product, or an investment opportunity—of greater value in return. The scheme operator convinces the victim to provide the fee, then subsequently informs the victim that he or she is ineligible for whatever was offered after the fee is paid. The victim is unable to recover the fee that was paid. To avoid suffering losses due to an advance fee scheme, take precautions before conducting business with a company you have never heard of. Providing any payment amount to a person or company you are unfamiliar with is a risky practice. When in doubt, speak to an experienced securities fraud attorney to determine whether the investment opportunity is fraudulent.  Pump and Dump Fraud A pump and dump scheme, also referred to as market manipulation, occurs when a group of fraudsters post content on the internet enticing investors to purchase a stock as soon as possible.  The fraudsters claim to have insider information regarding the product that will result in a jump in the share price of the stock. The fraudsters post content in multiple forums in an attempt to entice as many new investors as possible. Once investors purchase shares of the stock, the fraudsters sell their shares, resulting in a dramatic dip in the share price. New investors, lacking awareness of any fraudulent conduct, suffer the losses.  Pump and dump schemes began primarily through cold calling. However, the internet and social media provide fraudsters a more efficient way to attempt the scheme. Insider Trading Insider trading involves the use of “non-public, material information” to buy or sell stocks. Non-public material information includes any information that could substantially impact an investor’s decision...

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FINRA Arbitration in 2021: The Complete Guide

If you lost money in the stock market because of your broker’s bad advice or careless investment practices, would you know where to turn for help recouping your losses? Robert Wayne Pearce and his team with the Law Offices of Robert Wayne Pearce, P.A., possess a tremendous amount of experience fighting for people just like you who pledged their hard-earned money to a securities broker or investment professional who lost most or all of their nest egg.  You might have a legal case if you relied on your investment professional to grow and protect your money but lost money instead. Taking on your broker and their firm is not easy. You need a tough, accomplished, and successful FINRA arbitration attorney who knows how to win by your side.  Below is a complete guide on FINRA Arbitration in 2021. In this guide, you will learn about FINRA and the steps you can take to help recover your losses. 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 could take years to get to trial. The parties also have the opportunity to resolve the dispute by negotiating among themselves without going to arbitration.  FINRA’s Arbitration Forum Protects Investor Confidentiality Arbitration with FINRA is often confidential. The parties...

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Securities Law in 2021: The Definitive Guide

The law governing securities evolves constantly to keep pace with changes in the industry. Regulatory agencies like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) F/K/A National Association of Securities Dealers (NASD) enforce various rules and regulations designed to promote fair and full disclosure of material facts related to financial markets and individual securities transactions. This guide provides a surface-level overview of the securities laws in the United States and what those laws mean for you. Important Terms in Securities Law A security is an intangible financial instrument that entitles its owner to claims of ownership on assets and earnings of the issuer or the voting power that accompanies the claims. Securities exist in the form of: Notes, Stocks, Treasury stocks, Bonds, Certificates of interest, Collateral trust certificates, Transferable shares, Investment contracts, Voting trust certificates, Certificates of deposit for a security; or A fraction, undivided interest in mineral rights. Stock markets in the United States collect trillions of dollars on investments through the securities trade.  The individuals buying or selling securities are referred to as investors. The term “retail investor” refers to an individual who typically purchases securities from a broker and, in most cases, does not purchase a large quantity of securities. The term “institutional investor,” on the other hand, often refers to a company investing large sums of money in securities.  The company buying and selling securities for investors is known as a broker-dealer. Firms like Morgan Stanley and Merrill Lynch employ brokers to serve clients by buying and selling securities on their behalf.  History of Federal Securities Law Prior to the Great Depression, the United States lacked an expansive securities regulation at the federal level. As a result, companies falsified and misrepresented financial information without fear of consequences. During the 1920s, the stock market expanded rapidly as the U.S. economy grew and stock prices reached record highs. Between August 1921 and September 1929, the Dow increased by 600%. Excitement surrounding the stock market fueled retail investors to get involved. Many retail investors purchased stocks “on margin,” meaning they only paid a small portion of the stock price and borrowed the remaining amount from a bank or broker. Despite the audacity of the claim, many believed that stock prices would continue rising forever. In early September 1929, stock prices started to decline. Not yet alarmed, many investors saw an opportunity to buy into the stock market at a lower price. The Stock Market Crash of 1929 On October 18, 1929, stock prices decreased more significantly. October 24 signaled the first day of panic among investors. Known as “Black Thursday,” a record 12,894,650 shares were traded throughout the day. On October 28, the Dow suffered a record loss of 38.33 points, or 12.82%. The following day—”Black Tuesday”— held more devastating news for investors as stock prices dropped even more. 16,410,030 shares were traded on the New York Stock Exchange in a single day. The 1929 stock market crash resulted in billions of dollars lost and signaled the beginning of the Great Depression. The Aftermath In the wake of the crash, the U.S. Senate formed a commission responsible for determining the causes. The investigation uncovered a wide range of abusive practices within banks and bank affiliates and spurred public support for banking and securities regulations. As a result of the findings, Congress passed the Banking Act of 1933, the Securities Act of 1933, and the Securities Exchange Act of 1934. New York County Assistant District Attorney Ferdinand Pecora finalized the final report and conducted hearings on behalf of the commission and was later selected as one of the first commissioners of the SEC. Federal Securities Laws and Regulations The American banking systems suffered significantly in the wake of the stock market crash, as approximately one in three banks closed their doors permanently. Following the crash, the U.S. government imposed tighter rules and regulations on the financial industry. As securities evolve, regulatory agencies are responsible for imposing up-to-date regulations to protect investors. Banking Act of 1933 The Banking Act of 1933 (the Banking Act), implemented by Congress on June 16, 1933, signaled the start of many changes in the securities industry. First, the Banking Act established the Federal Deposit Insurance Corporation (FDIC), created to provide deposit insurance to depositors in United States depository institutions in an effort to restore the public’s trust in the American banking system.  Glass-Steagall provisions Four sections of the Banking Act—referred to as the Glass-Steagall legislation—addressed the conflicts of interest uncovered by Ferdinand Pecora during his investigation into the stock market crash of 1929. The Glass-Steagall legislation sought to limit the conflicts of interests created when commercial banks are allowed to underwrite stocks and bonds. In the previous decade, banks put their interest in promoting stocks and bonds to their own benefit, rather than considering the risks placed on investors. The new legislation banned commercial banks from: Dealing in non-governmental securities for customers; Investing in non-investment grade securities on behalf of the bank itself; Underwriting or distributing non-governmental securities; and Affiliation or employee sharing with companies involved in such activities. On the other side, the legislation prohibited investment banks from accepting deposits from customers. Deterioration and reinterpretation of Glass-Steagall provisions The separation of commercial and investment banks proved to be a controversial topic throughout the financial industry. Only two years after passing the Banking Act, Senator Carter Glass—the namesake of the provisions—sought to repeal the prohibition on commercial banks underwriting securities, stating that the provisions had unduly damaged securities markets.  Beginning in the 1960s, banks began lobbying Congress to allow them to enter the municipal bond market. In the 1970s, large banks argued that the Glass-Steagall provisions were preventing them from being competitive with foreign securities firms. The Federal Reserve Board reinterpreted Section 20 of the Glass-Steagall provisions to allow banks to have up to 5% of gross revenues from investment banking business. Soon after, the Federal Reserve Board voted to loosen regulations under the Glass-Steagall provisions after hearing arguments from Citicorp,...

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The Most Common Forms of Breach of Fiduciary Duty (And What to Do)

Breaches of fiduciary duty are unfortunately common. Since the fiduciary duty is the highest legal standard of care, however, there are severe consequences for a breach of fiduciary duty. With the help of an investment loss recovery attorney, you can hold the fiduciary accountable for his or her misconduct. What Is a Fiduciary Duty? A fiduciary is a person entrusted to act in the best interests of another (i.e. the principal). Once the fiduciary agrees to the relationship, the fiduciary is bound by a set of legal and ethical obligations, known as fiduciary duties.  In general, all fiduciaries owe a duty of loyalty and a duty of care. Some fiduciaries will owe additional duties based on the relationship and the industry in which they are in.  The duty of loyalty requires fiduciaries to act in the best interest of the principa, avoid any conflicts of interest, and refrain from self-dealing. The duty of care means the fiduciary must make informed decisions based on all information available.  Fiduciary Duties of Financial Advisors  While all financial advisors have a duty of care to their clients, only registered advisors have a fiduciary duty. It is important to know whether your financial advisor is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulating agency. Financial advisors who are not registered can make investments that benefit them, as long as the investment is within your stated objectives. A registered financial advisor, on the other hand, can invest only if it is in your best interest. For registered financial advisors, the fiduciary duties owed vary by state. However, the following fiduciary duties apply to all registered financial advisors in all states Duty to Recommend Suitable Investments Prior to recommending an investment, the financial advisor must study and understand the investor’s objectives, tax status, and financial situation, among other things. Any investments that the financial advisor recommends must be suitable to the investor’s needs.  Duty to Inform Investor A financial advisor must fully inform the investor of the risks associated with the purchase or sale of a security. The advisor cannot misrepresent any material facts regarding the transaction. Duty to Act Promptly and with Authorization  All client orders must be performed promptly and with investor’s express consent. The advisor must obtain separate authorization for each investment unless the investor has a discretionary account.  Duty to Refrain from Self-Dealing  A financial advisor cannot initiate a transaction where he or she personally benefits. Duty to Avoid Conflicts of Interest For any recommendations made after June 30, 2020, financial advisors have a fiduciary duty to avoid any conflicts of interest. If unavoidable, the advisor must disclose the conflict to the investor.  What Constitutes a Breach of Fiduciary Duty? A breach of fiduciary duty occurs when the fiduciary fails to act in the best interest of the principal. This can happen through an intentional act or failure to act.  There are four elements to a valid breach of fiduciary duty claim. Duty A fiduciary relationship must exist for the fiduciary to owe a duty. You must show that the fiduciary knowingly accepted that role to hold them to the fiduciary standard of care. This is typically shown through a written agreement between the parties, such as a customer agreement. Breach The fiduciary must act contrary to your best interests. A breach of fiduciary duty can be shown through deliberate acts, such as making decisions on your behalf without consent. You can also prove a breach through the fiduciary’s failure to act—for example, not disclosing a conflict of interest.  Damages You must suffer actual harm or damages from the fiduciary’s breach. Proving there was a breach is not enough for a valid claim of breach of fiduciary duty. Damages can be either economic or non-economic, such as mental anguish.  Causation There must be a direct causal link between the fiduciary’s breach and harm to you. Despite your damages, if they are unrelated to the fiduciary’s misconduct or an unforeseeable result of the breach, you cannot recover your losses.  What Are Common Forms of Breach of Fiduciary Duty? Below are just a few examples of how a financial advisor can breach his or her fiduciary duty. In each instance, the fiduciary fails to act in the best interest of the investor. Misrepresentation or Failure to Disclose Information If a financial advisor does not present a client with all material information about an investment, this is a breach of fiduciary duty. Material information is what a reasonable investor would consider important when deciding whether to invest.  Sometimes financial advisors will mislead investors by omitting information, such as risk factors or any negative information about a stock.  Excessive Trading Excessive trading, also known as churning, in your account is a breach of fiduciary duty. Financial advisors will make large numbers of trades solely to generate more commissions for themselves.  Unsuitable Investments Financial advisors must “know their customer” before making investment recommendations. This includes understanding the client’s investment objectives, risk tolerance, time horizon, financial standing, and tax status. The advisor breaches their fiduciary duty if they make an unsuitable investment, even with the best intentions.  Failure to Diversify Your financial advisor must recommend a mix of investments so that your assets are properly allocated among various asset classes and industries. Failing to diversify your portfolio puts you in a position of great risk and is a breach of fiduciary duty. If your assets are over-concentrated in a particular stock or sector, you may experience significant losses if the company or industry does not perform well.  Failure to Follow Instructions When you give instructions to your financial advisor, they have the fiduciary duty to promptly perform your orders. If your advisor fails to follow your instructions in a timely manner and you suffer financial losses, you can recover.  What To Do If Your Financial Advisor Breached a Fiduciary Duty If you lost money at the hands of your financial advisor, there are several potential courses of action. An experienced investor loss recovery attorney can walk you through the different options and...

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What Is Financial Advisor Malpractice?

As an investor, you expect your financial advisor to properly manage your investment portfolio. Unfortunately, this is not always what happens. Financial advisors owe their clients certain obligations with respect to their investment accounts. Failure to adhere to these obligations can result in a claim for financial advisor malpractice. In certain circumstances, the financial fraud committed by your financial advisor will be obvious. For example, if your financial advisor forged your signature on a document, he or she clearly committed misconduct. However, most financial malpractice claims are not this straightforward.  The investment loss recovery attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped hundreds of investors recover losses caused by financial advisor malpractice. Contact us today for a free consultation. What Are My Financial Advisor’s Obligations and Duties to Me?  Registered financial advisors must adhere to certain fiduciary duties, or obligations, with respect to their clients. Financial advisors who are not registered and are not making securities recommendations to retail customers still owe their clients certain obligations, but they are not as stringent as fiduciary duties. Fiduciary Duties Registered investment advisors are bound by fiduciary duties to their clients. The Investment Advisers Act of 1940 defines the role and responsibilities of investment advisors. At its core, the purpose of this act was to protect investors.  A financial advisor owes their client a duty of care and a duty of loyalty. The Securities and Exchange Commission (SEC) interprets these fiduciary duties to require a financial advisor to act in the best interest of their client at all times. The SEC provides additional guidance for each fiduciary duty specifically. The duty of care requires that an investment advisor provide investment advice in the client’s best interest, in consideration of the client’s financial goals. It also requires that a financial advisor provide advice and oversight to the client over the course of the relationship. The duty of loyalty requires an investment advisor to disclose any conflicts of interest that might affect his or her impartiality. It also means that the financial advisor is prohibited from subordinating his or her client’s interests to their own. The Suitability Rule Broker-dealers in the past were subject to less demanding obligations.  The Financial Industry Regulatory Authority (FINRA) regulates broker-dealers in the United States. FINRA previously imposed a suitability obligation on broker-dealers that only required them to make recommendations that were “suitable” for their clients.  Under the suitability rule, a broker-dealer could recommend an investment only if it was suitable for the client in terms of the client’s financial objectives, needs, and risk profile. Broker-dealers did not owe a duty of loyalty to their clients and did not have to disclose conflicts of interest.  Recently, however, FINRA amended its suitability rule. Regulation Best Interest FINRA recently amended its suitability rule to conform with SEC Regulation Best Interest (Reg. BI), making it clear that stockbrokers now uniformly owe certain heightened duties when making recommendations to retail customers.  As with fiduciary duties, under Reg. BI, all broker-dealers and their stockbrokers now owe the following duties:  Disclosure,  Care,  Conflicts, and  Compliance.  However, it’s important to remember that they owe these duties only when they make recommendations regarding a securities transaction or investment strategy involving securities to a retail customer.  While these changes are still new, one thing is certain—the Reg. BI standard is definitely a heightened standard compared with the previous suitability standard.  Forms of Financial Advisor Malpractice Investors usually hire financial advisors because they do not have experience in investing. With this lack of experience, how can an investor know when a financial advisor is committing malpractice? There are several ways financial advisors can commit financial malpractice. Lack of Diversity Financial advisors have a duty to ensure your investment portfolio is properly diversified to include a variety of investment assets. That may include a mixture of stocks, bonds, or mutual funds in multiple different sectors.  A portfolio that lacks diversification is likely to result in significant losses to the client in the event of a market downturn in a specific sector. If you believe your financial advisor failed to properly diversify your portfolio, contact an investment loss recovery attorney today. The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have significant experience handling these types of cases and will ensure the financial advisor responsible for your losses is held accountable.  Your Investments Are Unsuitable Every investor is unique. That means financial advisors must consider the specific goals and needs of each individual client before recommending investments. A financial advisor must consider a client’s risk tolerance when recommending investments. Risk tolerance refers to an investor’s willingness to endure losses in the financial market. For an aggressive investor, a financial advisor might recommend a risky investment that has a better possibility of high returns. The same recommendation would be unsuitable for an investor with a low risk tolerance. If your financial advisor recommended investments that you believe are unsuitable, contact the Law Offices of Robert Wayne Pearce to have your case reviewed by an experienced investment losses attorney. Your Investment Advisor Is Excessively Trading Excessive trading, sometimes called churning, occurs when a financial advisor buys and sells stocks excessively with the goal of generating commission fees. Churning is prohibited by the SEC. Investors should frequently review their account statements to ensure that the number of trades in their account does not increase drastically. If your financial advisor has been excessively trading in your investment account, reach out to an attorney as soon as possible to prevent further losses.  Financial Advisor Negligence In some cases, your financial advisor may seem like he or she is doing nothing at all. The financial advisor could be focused on other clients or on personal matters. Regardless of the reason, this behavior is not appropriate. A financial advisor may be guilty of malpractice for failing to give the appropriate amount of attention to a client.  Client Testimonials The Law Offices of Robert Wayne Pearce, P.A., has been representing investors in disputes against...

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What To Do if You Believe Your Financial Advisor is Stealing Your Money (Step by Step)

Financial advisors are highly trusted professionals who help make decisions that impact your economic future. When that trust is broken through a bad or negligent act, the investor suffers and the financial advisor must be held accountable. If you believe your financial advisor stole your money, there are several options for you to recover. For assistance, contact the Law Offices of Robert Wayne Pearce, P.A. to learn how we can help you today. The 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 investments, and disclose relevant information to you.  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.   Losing money through investment is not enough to bring a claim against your financial advisor. Remember, there is no guarantee of return when investing. Even if your financial advisor made the recommendation, 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. Types of Claims Against Your Financial Advisor  Understanding securities law and FINRA regulations are crucial to know 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 40 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. The Law Offices of Robert Wayne Pearce P.A. have handled hundreds of cases involving many types of misconduct by 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. Other examples of breaching the fiduciary duty include: Unauthorized trading, Unsuitable investments,  Undiversified portfolio, and  Account churning.  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.  What You Can Do There are several stages of resolution to recover your financial losses. Depending on the facts of your case, you may be able to resolve it and recover without any formal proceedings, or you may have to litigate. The attorneys at The Law Offices of Robert Wayne Pearce P.A. have helped investors in all stages and have successfully recovered over $140 million in losses for our clients.  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.  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...

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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 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: 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...

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