Securities and Investment Fraud Attorneys in Denver, Phoenix, Seattle, Grand Rapids, Ann Arbor and Chicago
The attorneys at Israels & Neuman, PLC have prosecuted hundreds of claims for securities and investment fraud. They have recovered millions of dollars for victims from broker-dealers, investment advisory firms and other financial institutions.
Can I Sue My Broker or Financial Advisor for Negligence or Fraud In The Sale of Securities?
The answer to this question is: Yes, you can sue your broker, brokerage firm, and financial advisor through the FINRA arbitration process to recover your damages associated with negligence, fraud, misrepresentations or omissions in the sale of securities.
What Protections Are in Place to Prevent Financial Advisor Fraud?
Most investors in the United States are protected by various State Securities laws that prohibit fraud in the sale of securities. When a financial advisor violates a state securities act, they can face serious legal, regulatory, and financial consequences. State securities acts, also known as “Blue Sky Laws,” are designed to protect investors from fraud, negligence, and other forms of misconduct in the sale of securities. The penalties for violating these laws depend on the severity of the violation and can include both civil and criminal sanctions.
What Are Different Types of Financial Advisor Fraud?
Misrepresentation or False Promises
Telling clients false information about investment opportunities, exaggerating potential returns, or downplaying risks to convince them to make decisions that are not in their best interests. Along with misrepresentations, omitting important information can form a basis for a claim.
Unauthorized Trading
Conducting trades or making investment decisions without the client’s permission or knowledge.
PONZI Schemes or Embezzlement
Using client funds for personal use or to pay returns to earlier investors instead of investing the money as promised.
Failure to Disclose Conflicts of Interest
Not informing clients when an investment might benefit the advisor more than the client, such as when the advisor gets higher commissions or incentives for recommending certain products.
Excessive or Hidden Fees
Charging unusually high or undisclosed fees, which erodes the client’s investment returns.
Forgery or Account Manipulation
Altering documents, forging signatures, or manipulating account information to hide losses or make unauthorized withdrawals.
Churning
When a broker or advisor makes trades (sometimes in rapid succession) where the primary purpose is to generate commissions or fees for the broker, regardless of whether the trades are proper for the investor.
Victims of financial advisor fraud can suffer significant financial losses, often at crucial stages of life such as near or in retirement. Legal action, such as suing for breach of fiduciary duty or fraud, can be taken to recover lost funds.
What to Do If You Are A Victim of Securities Fraud?
If you believe that you have been a victim of fraud, it is import for you to keep all documents related to the potential claim. You should also contact Israels & Neuman, PLC as soon as possible to discuss your rights as an investor.
How to Protect Yourself from Advisor Investment Fraud?
- Choose a Reputable Financial Advisor
- Check Credentials: Verify that the advisor holds recognized credentials like Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Registered Investment Advisor (RIA), or an appropriate FINRA license.
- Verify Registration: Ensure the advisor is registered with regulatory bodies like the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA). Utilize websites like FINRA’s BrokerCheck to review the advisor’s background.
- Read Reviews and Ask for References: Look for any complaints or red flags in online reviews or from other clients. Ask for references from existing clients if possible.
- Understand Fees and Compensation
- Clarify Fee Structures: Ask how your advisor is compensated—whether through fees, commissions, or a combination. Be cautious of advisors who receive commissions from specific products, as this can create conflicts of interest.
- Demand Full Transparency: Ensure you receive a clear, written breakdown of all fees and expenses involved in managing your investments.
- Monitor Your Accounts Regularly
- Review Statements: Regularly check your account statements to ensure that all transactions match what was discussed. Look out for unauthorized trades or fees.
- Be Aware of Unusual Activity: Be wary of excessive trading (churning), unexpected fees, or sudden changes in your account balance.
- Understand Your Investments
- Ask Questions: Make sure you fully understand every investment your advisor recommends. Don’t hesitate to ask about the risks, the rationale behind the investment, and how it fits with your goals.
- Avoid “Too Good to Be True” Offers: Be cautious of promises of unusually high returns with little to no risk, which are classic signs of fraudulent schemes.
- Check for Conflicts of Interest
- Insist on Fiduciary Responsibility: Choose an advisor who is legally bound to act in your best interests, such as a fiduciary, and confirm they are transparent about any potential conflicts of interest.
- Read the Fine Print: Ensure all disclosures about potential conflicts, fees, or affiliations are provided in writing.
- Avoid High-Pressure Sales Tactics
- Take Your Time: Avoid making decisions under pressure. Fraudulent advisors may try to rush you into an investment by claiming it’s a limited-time opportunity.
- Get a Second Opinion: If something feels off, don’t hesitate to seek advice from another trusted advisor or financial expert.
- Document Everything
- Keep Written Records: Maintain detailed records of your discussions with your advisor, including emails, meeting notes, and signed agreements.
- Use Secure Channels: Ensure communication is through secure and official channels rather than informal means like text messages.
- Know the Red Flags of Fraud
- Unwillingness to Share Information: Be cautious if your advisor refuses to provide detailed explanations or documentation.
- High-Risk or Unexplained Investments: Be suspicious of unfamiliar or overly complex investments that are difficult to understand.
- Report Suspicious Activity
- Consult Legal or Financial Experts: If you believe you’ve been defrauded, consider seeking legal counsel to explore your options for recovery. Israels & Neuman offers a free no obligation case review.
Our attorneys have handled securities disputes in state and federal courts throughout the country, but we primarily represent investors in FINRA arbitration proceedings. Our firm has recovered millions of dollars for investors who lost money because of wrongful conduct by their brokers, financial advisors, or brokerage firms.
All of our cases are taken on a contingency fee basis, meaning that we do not get paid unless we recover money for you. We represent investors in securities litigation in all 50 states.