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J.P. Morgan Sued For Edward Turley’s Alleged Misconduct: $55 Million!

The Law Offices of Robert Wayne Pearce, P.A. has filed another case against Ex-J.P. Morgan broker Ed Turley for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The Law Offices of Robert Wayne Pearce has filed another case against J.P. Morgan Securities for alleged misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts continuing in fall 2019 and thereafter by Edward Turley (“Turley”), a former “Vice-Chairman” of J.P. Morgan. At the outset, it is important for our readers to know that our clients’ allegations have not yet been proven. IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with J.P. Morgan and Mr. Turley and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889. Latest Updates on Ed Turley – November 18, 2022 The Advisor Hub reported today that the former star broker with J.P. Morgan Advisors in San Francisco Edward Turley agreed to an industry bar rather than cooperate with FINRA’s probe of numerous allegations of excessive and unauthorized trading that resulted in more than $100 million worth of customer complaints. FINRA had initiated its investigation of Edward Turley as it related to numerous customer complaints in 2020. The regulator noted in its Acceptance Waiver and Consent Agreement (AWC) that the investors had generally alleged “sales practice violations including improper exercise of discretion and unsuitable trading.” According to Edward Turley’s BrokerCheck report, he had been fired in August 2021 for “loss of confidence concerning adherence to firm policies and brokerage order handling requirements.” On October 28th, FINRA requested Turley provide on-the-record testimony related to his trading patterns, including the “use of foreign currency and margin, and the purchasing and selling of high-yield bonds and preferred stock,” but Edward Turley through counsel declined to do so. As a result, Edward Turley violated FINRA’s Rule 8210 requiring cooperation with enforcement probes, and its catch-all Rule 2010 requiring “high standards of commercial honor,” the regulator said and he was barred permanently from the securities industry. Related Read: Can You Sue a Financial Advisor or Stockbroker Over Losses? Turley Allegedly Misrepresented And Misled Claimants About His Investment Strategy The claims arise out of Turley’s “one-size-fits-all” fixed income credit spread investment strategy involving high-yield “junk” bonds, preferred stocks, exchange traded funds (“ETFs”), master limited partnerships (“MLPs”), and foreign bonds. Instead of purchasing those securities in ordinary margin accounts, Turley executed foreign currency transactions to raise capital and leverage clients’ accounts to earn undisclosed commissions. Turley over-leveraged and over-concentrated his best and biggest clients’ accounts, including Claimants’ accounts, in junk bonds, preferred stocks, and MLPs in the financial and energy sectors, which are notoriously illiquid and subject to sharp price declines when the financial markets become stressed as they did in March 2020. In the beginning and throughout the investment advisory relationship, Turley described his investment strategy to Claimants as one which would generate “equity returns with very low bond-type risk.” Turley and his partners also described the strategy to clients and prospects as one “which provided equity-like returns without equity-like risk.” J.P. Morgan supervisors even documented Turley’s description of the strategy as “creating portfolio with similar returns, but less volatility than an all-equity portfolio.” Note: It appears that no J.P. Morgan supervisor ever checked to see if the representations were true and if anybody did, they would have known Turley was lying and have directly participated in the scheme. The Claimants’ representative was also told Turley used leverage derived from selling foreign currencies, Yen and Euros, to get the “equity-like” returns he promised. Turley also told the investor not to be concerned because he “carefully” added leverage to enhance returns. According to Turley, the securities of the companies he invested in for clients “did not move up or down like the stock market,” so there was no need to worry about him using leverage in Claimants’ accounts and their cash would be available whenever it was needed. The Claimants’ representative was not the only client who heard this from Turley; that is, he did not own volatile stocks and not to worry about leverage. Turley did not discuss the amount of leverage he used in clients’ accounts, which ranged from 1:1 to 3:1, nor did Turley discuss the risks currency transactions added to the portfolio, margin calls or forced liquidations as a result of his investment strategy. After all, Turley knew he could get away without disclosing those risks. This was because J.P. Morgan suppressed any margin calls being sent to Turley’s clients and he liquidated securities on his own to meet those margin calls without alarming clients.  This “one-size-fits-all” strategy was a recipe for disaster. J.P. Morgan and Turley have both admitted that Turley’s investment strategy was not suitable for any investor whose liquid net worth was fully invested in the strategy. It was especially unsuitable for those customers like Claimants who had other plans for the funds in their J.P. Morgan accounts in fall 2019 and spring 2020. Unfortunately, Turley recommended and managed the “one-size-fits-all” strategy for his best clients and friends, including Claimants. Turley was Claimants’ investment advisor and portfolio manager and required under the law to serve them as a “fiduciary.” He breached his “fiduciary” duties in making misrepresentations, misleading statements, unsuitable recommendations, and mismanagement of Claimants’ accounts. The most egregious breach was his failure to take any action to protect his clients at the end of February 2020, when J.P. Morgan raised the red flags about COVID-19 and recommended defensive action be taken in clients’ accounts. Turley Allegedly Managed Claimants’ Accounts Without Written Discretionary Authority Claimants’ representative hired Turley to manage his “dry powder,” the cash in Claimants’ accounts at J.P. Morgan, which he would need on short notice when business opportunities arose. At one point, Claimants had over $100 million on deposit with J.P. Morgan. It was not...

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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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Breach of Fiduciary Duty: Definition, Examples, and Claims

Breaches of fiduciary duty are unfortunately common. Given that fiduciary duty is the highest legal standard of care, any failure to uphold this responsibility can have severe consequences for those who have been entrusted with a fiduciary duty. In this article, we will cover what is a breach of fiduciary duty, common examples, and whether or not you have a legal claim. An investment loss recovery attorney can help you take action against a fiduciary who has acted negligently or wrongly. What is a Breach of Fiduciary Duty? Breach of fiduciary duty occurs when an individual, such as a financial advisor, that has been entrusted with managing the affairs of another fails to act in good faith and is negligent or malicious in their duties. Investment loss? Let’s talk. or, give us a ring at 561-338-0037. A fiduciary is bound to act in the best interests of their client, and when they fail to do so, it can lead to significant financial losses. If you believe you are dealing with investment loss due to a breach of fiduciary duty, you should strongly consider hiring an investment loss attorney. The quicker you reach out, the quicker you can begin the process of recovery. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at (800) 732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve. Four Elements of a Breach of Fiduciary Duty Case To prove a breach of fiduciary duty, four key elements must be demonstrated: the existence of a fiduciary duty, a violation of that duty, resulting harm, and a causal connection between the breach and the harm. Duty – There Exists a Fiduciary Duty There must be an established fiduciary relationship between you and the other party for the fiduciary to owe you a duty. To hold a fiduciary accountable to their standard of care, it is essential to demonstrate that they knowingly accepted the role. This is typically shown through a written agreement between the parties, such as a customer agreement. Breach – There Was a Violation of This Duty Fiduciaries are required to work in the best interests of their clients, and any deviation from this standard may constitute a breach. To demonstrate a breach of fiduciary duty, one must have evidence that the individual holding this responsibility acted negligently or maliciously—or prioritized their own interests over yours. This can include lost investments, diminished value of your assets, outright theft, decisions made without your consent, or failure to carry out one’s fiduciary responsibility. You can also prove a breach through the fiduciary’s failure to act—for example, not disclosing a conflict of interest. It is best to speak with an investment fraud lawyer to determine if your fiduciary failed in their responsibility and contributed to your losses. Damages – The Breach of Duty Resulted in Harm to You For there to be a legitimate claim of breach of fiduciary duty, the breach must have caused you to suffer damages. Proving there was a breach is not enough for a valid claim of breach of fiduciary duty. Unless you can demonstrate how the violation of fiduciary duty directly caused you to suffer damages, your claim may not be successful. Damages can be either economic or non-economic, such as mental anguish.  Causation – There is a Connection Between the Breach and the Harm There must be a direct link between the fiduciary’s breach and harm to you. If you incurred damages that cannot be connected to the individual’s breach, your claim may not be successful. Breach of Fiduciary Duty Examples Breaches of fiduciary duties can take many forms. A fiduciary must act in the best interests of their client. When they fail to do so, serious harm can result. Examples of a breach of fiduciary duty include misrepresentation or failure to disclose information, excessive trading, unsuitable investments, failure to diversify, and failure to follow instructions. 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. Can You Pursue a Lawsuit for a Breach of Fiduciary Duty? Yes, you can pursue a lawsuit for a breach of fiduciary duty. You will need to speak with an investment fraud lawyer to determine if your fiduciary failed in their responsibility and contributed to your losses. It is important that you prove there was a breach, damages were caused, and the breach was directly connected to the harm you suffered in order for your lawsuit to be successful. Do you believe you’ve been the victim of a breach of fiduciary duty? Don’t wait – contact an experienced investment fraud attorney as soon as possible to learn more...

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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 $160 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.

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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...

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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...

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Everything You Need to Know about an SEC Wells Notice

If you’ve received a Wells Notice from the SEC, it’s important to understand what it is and how to respond. What is a Wells Notice? A Wells Notice is usually a formal letter (sometimes just a telephone call) in which the staff enforcement attorneys of the U.S. Securities and Exchange Commission (SEC) notify individuals and/or firms that they are planning to recommend that the SEC authorize the attorneys to bring an enforcement action against the individual and/or the firm.  Investment Losses? Let’s talk. or, give us a ring at 800-732-2889. A Wells Notice will typically set forth the specific allegations against the individual and/or firm, as well as provide an opportunity for a response before the SEC makes a final decision on whether to bring charges. After an SEC investigation has turned up evidence of potential securities law infractions, the staff enforcement attorneys will usually provide a Wells Notice but, not always! Note: If you have received a Wells Notice, it means the SEC enforcement attorneys believe you have been violating securities laws and regulations, it is not a finding of guilt. It is important that you act quickly and consult with an experienced securities defense attorney to protect your rights and interests. What information is contained in a Wells Notice? A Wells Notice from the SEC will usually contain the following information: The majority of what appears in a written Wells notice is boilerplate. Typically, the written notice details statutory and regulatory infractions under consideration but does not allude to the specifics of the specific case. Are public companies required to disclose a Wells Notice? A Wells notice is a private communication to the recipient, and the Commission will not disclose it. In the past, many companies elected to not make any public disclosure of a Wells Notice. However, in recent years, some companies have voluntarily disclosed the receipt of a Wells Notice in their public filings with the SEC. Generally, such disclosures are a discretionary choice, rather than a requirement. The decision turns on whether the investigation and potential consequences would be a material fact that needs to be disclosed in light of other statements being publicly made by the company. Are registered broker-dealers and investment advisors required to disclose a Wells Notice? Yes, if you are a registered broker-dealer or investment advisor, you will be required to disclose the receipt of a Wells Notice in your Form U4. Related Reads: SEC Subpoenas: How to Respond How to Respond to a Wells Notice If you’ve received a Wells Notice, the first thing you should do is consult with an experienced securities defense attorney. Your attorney will help you understand the specific allegations against you and decide whether you should respond at all. If so, the attorney will craft a strategic and customized response on your behalf. Your response to a Wells Notice (also known as a Wells Submission) will be incredibly important in determining whether or not the SEC takes enforcement action against you. In some cases, a well-crafted response may convince the SEC to drop the matter entirely. In other cases, it may result in a more lenient punishment if the SEC does decide to bring charges. Before responding to a Wells Notice, you and your attorney will need to carefully review all of the evidence collected during the SEC’s investigation. This may include: Once the analysis of the evidence is complete, your attorney will work with you to prepare a persuasive response that addresses the SEC’s specific concerns. This is a very important step as a Wells Submission presents the facts and the first arguments to persuade the SEC Enforcement Division to not pursue an enforcement action or to recommend a less severe action. The SEC will review the response and make a final determination on whether or not to bring charges. Even though the Wells Notice process is confidential, it may become public if the SEC decides to bring an enforcement action against you. More important, whatever is written in the response to the Wells notice could be deemed an admission of the facts stated within the Wells Notice. What Happens if the SEC decides to bring Charges? If the SEC decides to bring charges after you’ve received a Wells Notice, it will file a formal complaint against you in federal court or administrative proceeding. At this point, you will have an opportunity to defend yourself against the SEC’s charges. This is a complex process, and you will need to have an experienced securities defense attorney by your side to protect your rights and help you navigate the legal system. A Wells Notice is just the beginning of the SEC’s enforcement process, but it’s a very important step. If you’ve received a Wells Notice, make sure you consult with an experienced SEC defense attorney as soon as possible to ensure the best possible outcome in your case. Consider Consulting with an Experienced SEC Defense Attorney If you’ve received a Wells Notice, you should consult with an experienced securities defense attorney as soon as possible. The Law Firm of Robert Wayne Pearce, P.A., has represented individuals and entities in SEC investigations and enforcement actions for over 40 years. For dedicated representation by attorneys with substantial experience in all aspects of SEC investigations and enforcement proceedings nationwide, contact our law firm by phone toll-free at 800-732-2889, locally at 561-338-0037, or Contact Us online. We will help you understand the specific allegations against you and will work with you to prepare a persuasive response to the SEC.

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FINRA Rule 3270: Outside Business Activities

When you engage a registered investment adviser to manage your money, you want to make sure that nothing will interfere with your securities professional’s duty to you. FINRA Rule 3270, referred to outside business activities, gives transparency to potential conflicts of interest your investment adviser may have.  FINRA Rule 3270 requires your investment advisor to disclose their outside business activities. The purpose of FINRA 3270 is to keep FINRA member firms accountable to you, the client. If you are concerned that your securities professional might have violated certain disclosure rules, a knowledgeable FINRA arbitration lawyer can help you understand your options. What is FINRA Rule 3270? FINRA Rule 3270 prohibits broker-dealers from engaging in any outside business activities that involve the sale of securities unless they have first provided written notice to their employing firm. “Outside business activity” refers to a registered person’s involvement in offering, purchasing, or selling securities outside of their broker-dealer’s regular business activities. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. FINRA Rule 3270 requires the disclosure of outside business activities. This FINRA regulation is a vital measure for protecting investors and ensuring that their advisor is prioritizing their interests. What is Considered a FINRA “Outside Business Activity”? FINRA outside business activities are broadly defined. FINRA Rule 3270 states that they include any paid work performed outside of a securities professional’s employment. This includes: This rule only requires an investment advisor to notify his or her employer of FINRA outside business activities. It does not require the investment advisor to do anything beyond provide a notification. Instead, the FINRA member firm makes a determination about what outside business activities are acceptable to the firm and its clients. The firm decides how or if outside business activities should continue to be carried out. Common Examples of FINRA Outside Business Activities Common examples of outside business activities include: Your investment advisor needs to report any of these activities to their employer under FINRA 3270.  The examples above are not exhaustive. An investment adviser also needs to report their wedding photography business or snorkel tour side-gig to their employer under the rules. FINRA rules about outside business activities apply to any paid work. Passive Investments Are Not Outside Business Activities While FINRA Rule 3270 casts a wide net, it allows investment advisers to make passive personal investments. Investing in diversified index funds or private securities transactions is not an outside business activity. Investment advisers may also put their personal funds into a blind trust. Blind trusts do not allow people to direct how their money is invested. Other FINRA rules require some disclosure about personal investments to ensure that your broker is being as transparent as possible about their potential conflicts of interest. FINRA Rule 3280 requires disclosure of private securities transactions. Your securities professional must strictly comply with this rule and its requirements. Your brokerage firm should ensure the investment adviser’s compliance with FINRA Rule 3280.  Responsibility of Brokerage Firms to Clients Once an investment advisor makes an outside business activities disclosure, the FINRA member firm must take important action. Each firm typically has its own form for reporting and its own protocol for review.  How Do Firms Determine Whether an Outside Business Activity Is Acceptable? Once a firm receives a disclosure, it needs to decide whether the outside business activities are acceptable. The FINRA member firm reviews all facts surrounding the disclosure. Then the firm answers two key questions to protect investors like you. First, Rule 3270 asks a FINRA member firm to consider all the circumstances surrounding the outside business activities. The review includes assessing the type of outside business, reviewing the time spent on the business, and confirming the type or amount of compensation received. The firm must decide whether outside business activities will interfere with the securities professional’s responsibilities to their employer and/or the firm’s clients. Second, Rule 3270 asks a FINRA member firm to think about whether outside business activities will be viewed by customers or the public as part of the member’s business. This review assesses whether a client would confuse the investment adviser’s outside business activities with their securities business.  How Do Firms Address Outside Business Activities That Conflict with an Advisor’s Duties? If the firm determines that the investment adviser’s outside business activities interfere with their responsibilities to the firm or its clients, then the firm should limit or prohibit the activity. FINRA Rule 3270 also requires firms to maintain a record of compliance. It is the firm’s responsibility to keep records of all outside business activities disclosures and compliance reviews. Brokerage firms are responsible to their clients to ensure that they are providing appropriate and conflict-free service in managing client assets. FINRA member firms must represent that their investment advisers are not engaging in outside business activities that compromise client interests. If you believe that your brokerage firm has failed to hold investment advisers accountable to FINRA Rule 3270 or otherwise adhere to conflict of interest rules, the firm may be liable for investor losses. Now may be the time to file a FINRA complaint against your advisor or broker. Have You Been Harmed by Your Investment Advisor’s Outside Business Activities? If you are an investor with concerns that your investment professional has failed to disclose important information to you, please call The Law Offices of Robert Wayne Pearce, P.A. Our FINRA arbitration lawyers have successfully represented individuals harmed by broker and investment advisor negligence or misconduct for over 40 years. Cases involving violations of FINRA rules are complex. Attorney Pearce has the expertise and experience to help you navigate any kind of securities or investment dispute. Contact our team today to discuss an evaluation of your potential case. Our team has recovered over $160 million for our clients, and we want to help you too.

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Announcing 2022 Winner – Robert Wayne Pearce Investor Fraud Awareness Scholarship

As promised, today we are announcing the 2022 winner of the Robert Wayne Pearce Investor Fraud Awareness Scholarship. Over the course of the year, we received applications from over 75 students from 44 schools around the country who all wrote quality essays about the Robinhood App and whether it was a good tool for novice investors or just a game to take advantage of them.  The winner of the $2,500 scholarship is Alecia Ann Des Lauries, a student at Alexandria Technical & Community College located in Alexandria, Minnesota, who wrote: The Robinhood Investment app is a darling amongst Millennials and Generation Z. The dashboard is sleek and easy to understand. It’s a “simple” and “easy” platform that “democratizes investing for all.” Anyone can buy stocks, EFTs, and cryptocurrency with just a press of the button. There are no commission fees, and you can start investing with just $1! What’s not to like? Turns out, a lot. Its slick marketing and user-friendliness disguise an ugly truth: the app is one of the worst ways to begin investing. The whole platform is a thinly veiled game that exploits first-time investors, which makes up more than half of its userbase (Segal, 2021).  Robinhood promotes freebies aggressively. New customers get free stock. You can earn more free stock if you refer friends to the app. There are frequent “giveaway sweepstakes” for cryptocurrencies and stocks. Social media influencers entice new users through unique free stock offers. Once you sign up, the app will even help you pick your first stock. Then, you can sign up for their debit card, the “Cash Card”, where you can earn bonuses, but for reinvesting in stock and crypto only on their platform.  Once you’re in, you’re pushed hard to invest. There are “Popular” and “Trending” stock lists. Widgets recommend what individual stocks and crypto to buy or sell. Celebratory messages and animations trigger when you buy, sell, or hit certain milestones. The bright, cartoonish art design is fun, but disarming. It’s easy to forget that you’re trading with real money and you’re undertaking real risks.  That’s intentional. It’s how Robinhood generates revenue. About 70% (Curry, 2022) of its revenue comes from payment for order flow, which means it receives payments upon routing trades to market makers. The more trades that occur, the more revenue Robinhood receives. That’s how the company collected $331 million in Q1 2021 (Geron, 2021). Most tellingly, the platform itself is simplistic. There are no mutual funds or fixed income for more conservative investors. There are no IRAs or 401(k)s—a huge disservice to the 55% of Millennials (Loudenback, 2019) and 90% of Generation Z (Koterbski, 2022) who don’t have retirement accounts. Robinhood doesn’t offer forex or futures for more experienced investors, let alone stock or ETF screeners for research-intensive investing. The most rudimentary research tools are behind a paywall, and even then, it’s insufficient compared to competing brokers. More seasoned investors quickly flock to other brokers that offer more robust tools. That’s because those investors aren’t Robinhood’s target market. And the platform wants to remain that way. The educational resources, while improving, are still laughably shallow. There is almost nothing on risk management; most of the “risk” you’ll see is on their disclaimers. Robinhood pays lip service to help build “wealth for a new generation”, while equipping its users with inferior tools and subpar education. It’s no wonder many columnists criticized Robinhood for being too much like a casino. And like the saying goes, the house always wins! We thank all the other applicants for their efforts and announce that the next scholarship to be awarded December 15, 2023, will be given to the student who writes the most thoughtful essay about the Risks of Investing in the Cryptocurrency Market.

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FINRA Statute of Limitations: A Complete Overview

The FINRA Statute of Limitations applies to claims and disputes that arise under the rules, regulations, or statutes administered by FINRA. Investment brokers have a duty to treat their clients honesty and with integrity. Those who take advantage of, mislead, or steal from their clients shake the investing industry’s foundation. Regrettably, broker misconduct occurs all too often.  You need representation from a FINRA arbitration attorney who has the knowledge, skill, and extensive experience to help you recover your losses if you are a victim of investment broker misconduct. Robert Wayne Pearce and his staff with The Law Offices of Robert Wayne Pearce, P.A., have over 40 years of experience fighting on behalf of investors victimized by broker misconduct. Contact us today to protect your rights.  Key Takeaways Investment brokers have a duty to their clients to be honest and act with integrity. FINRA is a non-profit corporation that works with the Securities and Exchange Commission to protect investors from brokerage firms’ wrongdoing. You need representation from a FINRA arbitration attorney who has the knowledge, skill, and extensive experience to help you recover your losses if you are a victim of investment broker misconduct. Investors aggrieved by their broker must understand that they do not have six years to file a court claim – in many instances, state statutes of limitations are much shorter than FINRA’s arbitration eligibility time frame. Filing your claim as soon as possible is the best way to protect your legal rights – if you suspect that you lost money in the market because of broker fraud, negligence, or misconduct. What Is FINRA? FINRA is an acronym for Financial Industry Regulatory Authority. FINRA is a self-regulating organization or SRO. As an SRO, FINRA is a non-profit corporation that works with the Securities and Exchange Commission to protect investors from brokerage firms’ wrongdoing.  FINRA offers professional examinations that certify applicants as investment brokers. It also provides continuing education programs to investment professionals to promote fairness and transparency in the securities markets.  FINRA has the authority to make rules and regulations that govern broker-investor relationships. It takes action to discipline brokers guilty of misconduct. Additionally, FINRA educates investors about their investment goals, strategies, and safe investing. What is the FINRA Statute of Limitations? FINRA’s procedural rules indicate that investors have six (6) years to file a claim for arbitration with FINRA. The six-year period starts when the event that gives rise to the legal claim occurred. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. Note: FINRA will dismiss any claim that FINRA decides missed the eligibility deadline. The arbitration panel will rule on eligibility if the parties disagree on whether the eligibility period elapsed. Do not delay filing. Speak with a FINRA lawyer about any questions about your arbitration claim. FINRA tolls, or stops, the eligibility period if the parties file the case in court. Moreover, FINRA’s procedural rules state that courts will toll the statute of limitations when the case remains in FINRA’s jurisdiction. Why Does FINRA Have a Statute of Limitations? There are a number of reasons why FINRA imposes a statute of limitations on investor claims. The first is to ensure that evidence related to the claim can still be reasonably obtained. This ensures that investors don’t wait until it’s too late to pursue their claim, and also protects brokerages from false or fraudulent accusations brought years after the events in question. In addition, FINRA’s statute of limitations helps to protect the integrity and reliability of its arbitration process. By ensuring that claims are brought within a reasonable timeframe, FINRA is able to accurately and fairly assess all evidence related to an investor claim in order to render an informed decision on their case. FINRA offers arbitration and mediation services to investors who file a complaint against their broker or brokerage firm. The victimized investor must file their claim with FINRA’s arbitration board within a specified period of time. The investor contemplating pursuing a legal cause of action for their losses should be aware of other deadlines that affect their claim. FINRA Statute of Limitations Concerns FINRA’s arbitration eligibility rules are distinct from federal or state statutes of limitations. Investors aggrieved by their broker must understand that they do not have six years to file a court claim. In many instances, the statutes of limitations are much shorter than FINRA’s arbitration eligibility time frame. Section 10(b) of the Securities and Exchange Act of 1934 and its regulations grant investors the right to sue their broker or advisor for fraud or any other unfair practice. Section 10b and its regulations found at 17 C.F.R. 240.10b-5 have a two-year statute of limitations.  Under these rules, the two-year statute of limitations starts when the investor discovers the fraud or no more than five years after the alleged fraud occurred. The time when the investor discovered the fraud is essential to understand. Otherwise, you might unwittingly allow the statute of limitations to run out before having the chance to file your claim. The statute of limitations starts when the investor knew or should have known about the fraud.  You must understand your investments and how they work so you can uncover evidence of fraud as soon as possible. If you are unsure if you are the victim of fraud, you must contact a knowledgeable and reputable securities attorney to protect your rights and investment. State Statutes of Limitations Some states will allow you to file a lawsuit in state court for a violation of state law. Filing in state court might be the better option for an aggrieved investor. Statutes of limitations for state law claims could be as short as two years.  How Long Do I Have to File a Claim Against My Broker? Filing your claim as soon as possible is the best way to protect your legal rights. Simply because FINRA agreed to arbitrate a claim within six years does not mean you should wait six years to file. Instead, you should be...

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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 securities 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 Is Financial Advisor Malpractice? Financial advisor malpractice is a term that refers to a financial advisor’s failure to satisfy the fiduciary standards and obligations that are in place to protect investors. As fiduciaries, financial advisors are legally bound to act in their clients’ best interests and not exploit them for personal gain. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. In some cases, financial advisor malpractice can be straightforward. Fabricating documents, forging a client’s signature, or lying to a client about the status of an investment are all examples of clear financial advisor malpractice. Other times, it can be more subtle and difficult to identify. As such, most investors become aware that they’ve been the victim of financial advisor malpractice only when their investments start to decline in value. This is often after it’s too late to recoup their losses, as the trusted advisor has already moved on to work with new clients who have yet to suffer the same fate. Note: If you believe you are a victim of financial advisor malpractice or investment fraud, the securities fraud lawyers at The Law Offices of Robert Wayne Pearce, P.A. can help. We have a history of successfully recovering financial losses for clients who have been hurt by unethical or fraudulent practices. Contact us today at (800) 732-2889 or fill out one of our short contact forms. 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. Related Read: The Most Common Examples of Breach of Fiduciary Duty (And What to Do) 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 a securities 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...

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Can You Sue a Brokerage Firm for Investment Losses?

If you have experienced significant investment losses, you may be wondering if you can sue your brokerage firm. Can You Sue a Brokerage Firm? Yes, you can sue a brokerage firm to help recover any investment losses that you have suffered due to a broker’s negligence or fraud. Lawsuits are typically filed against brokerage firms rather than individual brokers because the firm is vicariously (automatically) liable for the actions of all their employees. Need Legal Help? Let’s talk. or, give us a ring at 561-338-0037. In addition, brokerage firms are directly responsible for supervising its employees and ensuring that they are adhering to industry regulations and can be held liable for their supervisory failures. FINRA rules require a brokerage firm to establish policies and procedures that monitor brokers’ activities in order to avoid investor losses and investment fraud. As such, if the brokerage firm has failed to supervise its employees properly and this has led to your investment losses, you may have a claim against the firm. IMPORTANT: Filing a successful lawsuit against a brokerage firm is a complex undertaking. You will need to prove that the firm did not properly supervise its employees and that this failure led to your investment losses. If you decide to pursue legal action, it is important to consult with an experienced securities lawyer who can help you navigate the process and build a strong case against the firm. When Can a Brokerage Firm be Held Liable for Investment Losses? Despite having issues with an individual broker, many investors are surprised to learn that lawsuits against an individual are actually quite rare. The vast majority of lawsuits that are filed in connection with investment losses are brought against the brokerage firm that employed the broker. A brokerage firm is required to properly supervise its employees and to ensure that they are adhering to FINRA rules and regulations. If the firm fails to do so and this results in investors suffering losses, the firm can be held liable. It’s unfortunately common for independent brokerage firms to hire under-qualified brokers with little to no experience in the industry. These brokers are often given very little training and are left to their own devices when it comes to handling clients’ investments. As a result, these inexperienced brokers can make serious mistakes that cost investors a lot of money. Due to the fact that brokerage firms are required to properly supervise their employees, the liability for investment losses often falls on the brokerage firm that hired the broker rather than the individual broker him or herself. In addition, under Section 20(a) of the Securities and Exchange Act, a brokerage firm can be held liable for the negligence of its individual brokers and advisors. In essence, the law tends to hold the brokerage firm liable for the misconduct of its employees unless the brokerage firm acted in good faith and did not indirectly cause the misconduct which has resulted in the investors’ losses. Note: The process of establishing liability against a brokerage firm is complex and it can be difficult to prove that the firm is responsible for your investment losses. It is in the best interest of the brokerage firm to avoid liability, so they will likely have a team of lawyers working to protect them. As such, if you decide to pursue legal action against a brokerage firm, it is important to consult with an experienced securities lawyer who can help you navigate the process and build a strong case against the firm. The Law Offices of Robert Wayne Pearce P.A. has over 40 years of experience representing those who have been wronged by a fiduciary and have recovered over $160 million in investment losses for our clients. If you believe that you have been the victim of broker or brokerage firm misconduct, we can help. Contact us today for a free consultation. When Does the Liability Fall on the Individual Broker? There are many circumstances where the liability for investment losses may fall on the individual broker. For example, if a broker makes material misstatements or omissions about an investment, the broker can be held liable for any losses that result from those misrepresentations. Additionally, if a broker engages in fraudulent or illegal activity, the broker can be held liable for any losses that occur. All brokers and financial advisors are required to adhere to a strict code of ethics and owe their clients a fiduciary duty. A fiduciary duty is a legal obligation to act in the best interest of the client. If a broker breaches this duty and causes the client to lose money, the broker can be held liable. There are a wide variety of circumstances where a broker may breach their fiduciary duty to a client. For a more complete discussion on when the liability for investment losses falls on the individual broker, please see our article on “How to Sue a Financial Advisor or Stockbroker Over Investment Losses.” Have You Suffered Investment Losses? Take Legal Action Today. If you have suffered investment losses, you may be able to take legal action against the brokerage firm or individual broker responsible for your losses. The first step is to consult with an experienced securities lawyer to discuss your case and determine what legal options are available to you. The Law Offices of Robert Wayne Pearce P.A. has over 40 years of experience representing those who have been wronged by a fiduciary and have recovered over $160 million in investment losses for our clients. If you believe that you have been the victim of broker or brokerage firm misconduct, we can help. Contact us today for a free consultation.

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