| Read Time: 4 minutes | Brokers & Advisors | Fraud & Misrepresentation | Investor Losses | Unauthorized Trading |

Securities are financial instruments that can offer promising opportunities for investors to earn income and profit upon sale. Securities come in a variety of forms, including:

  • Stocks,
  • Options, 
  • Municipal (government) bonds,
  • Corporate bonds,
  • Mutual Funds,
  • Closed-End Funds,
  • Promissory Notes,
  • Real Estate Investment Trusts (REITs), and
  • Exchange Traded Funds (ETFs).

But investment losses are a possibility no matter what type of security you invest in. Some securities are more inherently risky than others. Because of the complexities of securities, investors often seek out experienced financial advisors or brokers to handle their investments. Investors expect their advisors to provide honest, transparent advice and to act in a way that serves the client’s best interests. Unfortunately, that is not always what happens. 

If you have suffered investment losses due to the actions of a financial advisor, contact a securities lawyer today. You might be wondering, What does a securities lawyer do? The answer is simple—a securities lawyer can be an advocate in your corner who will help you fight for your rights in the aftermath of your investment losses. 

Securities lawyer Robert Wayne Pearce has decades of experience helping investors recover. Call The Law Offices of Robert Wayne Pearce, P.A., today to discuss your case. 

Why Would I Need a Securities Lawyer?

When a financial advisor’s misconduct results in financial losses to their client, the financial advisor may be liable for securities fraud. However, suffering losses does not automatically entitle you to compensation. Investing is inherently risky, and success is never a guarantee. So what forms of misconduct amount to investment fraud? Knowing the most common types of investment fraud claims brought by investors is a good place to start.

Breach of Fiduciary Duty

Registered investment advisors are held to a fiduciary duty standard when it comes to serving their clients. Being a fiduciary essentially means that you have a legal duty to act in your client’s best interest. In some cases, a breach of fiduciary duty is easy to recognize. For example, if an investment advisor only recommends products that will generate the highest commission fees, they are putting their interest in gaining commissions over their client’s interest. However, a breach of fiduciary duty is not always so easy to recognize. Other ways a fiduciary can violate his or her duties include:

  • Failure to disclose material facts;
  • Commingling of investment funds;
  • Failure to disclose conflicts of interest;
  • Usurping an investment opportunity; and
  • Misappropriation of client funds. 

The fiduciary standard is the most stringent standard of care in American law. However, not all investment professionals must comply with this standard. The Investment Advisors Act of 1940 mandates that registered investment advisors adhere to the fiduciary standard. Other types of advisors may have more limited fiduciary duties. 

Failure to Supervise

Brokerage firms are responsible for the conduct of their securities representatives. FINRA Rule 3110 requires registered brokerage firms to establish and maintain a “reasonably well-crafted system” to supervise its representatives, so the firm can ensure compliance with securities laws and regulations. Some of the most common failure to supervise claims include:

  • Inadequate screening practices;
  • Inadequate training of representatives;
  • Failure to install appropriate written supervisory procedures;
  • Failure to follow up on suspected misconduct;
  • Lack of sufficient reviews and inspections;
  • Failure to effectively monitor transactions; and
  • Failure to effectively monitor registered representatives’ communication. 

Brokerage firms who fail to adequately supervise their representatives open the door for their customers to be taken advantage of. If you believe your representative was not being properly supervised, contact a securities lawyer today to discuss your case. 

Fraud or Misrepresentation

You need access to all relevant information about a security before you can make an informed decision on whether to invest. Thus, a financial advisor must disclose all relevant information when presenting you with an investment opportunity. 

The failure to disclose material information about an investment is a form of investment fraud. If your broker or financial advisor failed to disclose information material to an investment opportunity, contact a securities lawyer to discuss your claim.

Unauthorized Trading

A broker or financial advisor must have valid authorization before effectuating a transaction in your investment account. You can grant authorization to your advisor in two ways:

  1. Open a discretionary trading account; or
  2. Grant express authorization for each individual trade.

A discretionary account permits your broker to make trades in your account at his or her discretion, within the parameters you allow. 

Otherwise, express authorization must be given for each individual transaction made in your investment account. 

Excessive Trading

Excessive trading, also known as churning, occurs when an investment professional makes repeated trades in a client’s account for the sole purpose of generating commissions. Churning is most common in discretionary accounts because investors might show alarm if their investment professional is seeking trade authorization repeatedly. 

Making excessive trades is not a good investment strategy and often results in significant losses for investors. If your financial advisor or broker is repeatedly buying and selling securities in your account to drive up their commissions, contact a securities lawyer today.  

Lack of Diversification

An ideal investment portfolio contains multiple types of securities in a variety of sectors. This minimizes the risk of suffering significant losses if one sector of the stock market tumbles. 

A failure to diversify a client’s investment portfolio is a form of investor fraud. If you suffered investment losses because your portfolio was over-concentrated, you may be entitled to relief. 

What Does a Securities Lawyer Do?

Unfortunately, investment professional misconduct that causes investors to suffer significant losses is not uncommon. If you find yourself in this situation, you may not know what your options are or what steps to take next. This is where a securities lawyer comes in. 

If you are considering hiring a securities lawyer, you might also be wondering, What does a securities lawyer do? An experienced securities attorney will review your case to help you determine what to do to protect your rights and finances. Then, a securities lawyer can help you fight for the recovery you deserve. 

Contact a Securities Lawyer Today

What does a securities lawyer do? In short, an experienced securities lawyer can help you navigate an often complicated legal process. 

At the Law Offices of Robert Wayne Pearce, P.A., we can help you do just that. We will guide you through the process and strive to get you the compensation you deserve. Securities lawyer Robert Wayne Pearce is committed to holding brokerage firms and investment professionals accountable for negligence or misconduct. With over 40 years of experience as a securities lawyer, Robert is prepared to fight for you to recover the compensation you deserve. Contact our team online or by phone at 561-338-0037 for a free consultation.

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Robert Wayne Pearce

Robert Wayne Pearce has been a trial attorney for more than 40 years and is the founding partner of The Law Offices of Robert Wayne Pearce. You can learn more about Robert and his accomplishments by clicking here.

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