Broker/Investment Advisor Misconduct
Ohio Stock Broker Misconduct AttorneyMost Wall Street brokerage firms go to great lengths to convince the investing public that they are staffed with "financial advisors" who care for their clients' financial well-being. The trusted stockbroker is held out as a professional advisor who will keep a careful eye on your portfolio and protect your interests through thick and thin. This may not always be the case. At the Associated Offices of Dennis Seaman & Associates, Co., L.P.A., and Garson & Associates, Co., L.P.A. (Seaman & Garson), in Cleveland, Ohio, our lawyers provide investors with representation in claims for stock broker misconduct and other forms of investment fraud. Did you lose most of your life savings or retirement assets through investment fraud?If so, you may think you can afford to hire a lawyer. However, an investor who has suffered serious losses due to an investment counselor or stockbroker's failure to act in good faith or breach of fiduciary duty may not have the resources to pursue a claim under a traditional hourly fee arrangement. At Seaman & Garson, we are committed to the success of our clients and typically charge no attorneys' fees unless our client successfully recovers damages as a result of our representation. Contact our Cleveland offices to arrange a free consultation with a lawyer experienced in stockbroker misconduct cases. What are your investment counselor's true goals?Representatives at most brokerage firms are really interested in only two things — making money from their existing clients and finding more clients to make even more money. Frequently, your "advisor" will have had little, if any, training in such basic concepts as asset class diversification, risk analysis, periodic portfolio review and investment suitability. They are salespeople, generally not credentialed in investment or finance, despite the millions of marketing dollars spent by the large brokerage firms every year to convince the unsuspecting public otherwise. So when large retirement nest eggs are moved to a brokerage firm and invested as directed by the firm's supposed "financial advisor," many retirees may find themselves on the losing end. Frequently, they are steered towards mutual funds or individual stocks that are far too risky. Their retirement portfolios are not properly diversified with fixed-income investments or other less volatile types of investments, and when market conditions change, no one calls and advises them to protect themselves against large losses. To make matters worse, many retirees are sold inappropriate, high-cost variable annuities, an insurance product that almost always pays a large up-front commission to the broker, but is often unsuitable for the client. In the end, the client is the loser, and the brokerage firm invariably refuses to take responsibility for the excessive losses suffered from the bad advice given to their client. Fiduciary duty of a stockbroker or investment advisorFortunately, there is hope for victims of such unscrupulous stockbroker and investment advisor practices, as despite their best efforts to avoid liability, stockbrokers do owe specific fiduciary duties to their clients. First and foremost, they are required to "know the customer" by gathering and maintaining pertinent information, and to only recommend investments that are suitable given the customer's financial profile. Stockbrokers also have a duty to disclose important information concerning the recommended investments, including the level of risk associated with each investment. Moreover, brokers generally owe a fiduciary duty of good faith and fair dealing, which means that they are not allowed to recommend unsuitable investments solely because they stand to make a large commission. In short, brokerage firms can be held liable for unsuitable investment recommendations. If you have suffered excessive losses due to stockbroker misconduct, our attorneys can help you identify a course of action. Contact our Cleveland, Ohio, offices to arrange a free consultation with an investment misconduct attorney. Typical stockbroker misconduct claims include: Unsuitable Investment Advice: Unsuitability, or unsuitable investment advice, occurs when your money is invested in stocks or other investments that do not match your specified needs. It is the duty of a stockbroker to make investment recommendations to clients that are suitable with each client's risk tolerance, needs, and investment objectives. Suitability is based on a customer's age, income, net worth, education, stated investment objectives, and prior investment experience. Rules governing stockbroker conduct require that in recommending the purchase, sale, or exchange of any security, the broker shall have reasonable grounds for believing that the recommendation is suitable based upon the facts disclosed by the customer when discussing his or her financial situation and needs. An investment may be unsuitable if:
Did your financial advisor place your savings in high-risk investments or in investments that did not match your specific goals? Was your 401K or self-directed IRA invested in risky equity investment, as opposed to being diversified among the various asset classes (growth equity, value equity, bonds, fixed income, cash, etc.)? If so, you may have received unsuitable investment recommendations. If you suffered excessive losses as a result of such unsuitable recommendations, you may have a claim for unsuitability. If you believe your stockbroker caused you to suffer losses due to unsuitable investment advice, contact Seaman & Garson for a free consultation. We may be able to help you recover some if not all of your losses. Breach of Fiduciary DutySecurities dealers and their employees are considered fiduciaries by the courts. This is especially the case when the securities client is elderly or otherwise unable to fully appreciate the broker's advice. When a large brokerage firm encourages clients to rely on the advice of registered representatives who claim to have expertise in the area of investments, the firm cannot avoid the imposition of fiduciary duties. The fidelity required of a broker includes the duty of good faith and loyalty, the duty to use such skill and competence as is common in the profession, and the duty to place the investor's interests before those of the broker. The customer who is relying on the expertise of the broker has the right to receive pertinent information concerning the broker's recommended course of action, and to receive honest advice intended to assist the client in furthering his or her financial interests. Stockbroker misrepresentations and omissionsMisrepresentation occurs when a broker or investment advisor intentionally misleads the customer and/or fails to disclose a material fact about an investment that would have affected the customer's decision had the fact been disclosed. In arbitration, the hearing panel may consider the customer's investment experience, risk tolerance, sophistication, objectives, age, and financial well-being in deciding whether the customer was misled. Our lawyers will carefully evaluate your broker or investment counselor's statements for illegal misrepresentations or omissions. Unauthorized trading If you notice that transactions are occurring in your account without your prior permission or knowledge, those transactions may constitute unauthorized trading. Any transaction that is made in the account without the customer's knowledge or approval, or any transaction that strays from the customer's consent regarding quantity or price, is considered unauthorized trading. Trading without the customer's prior consent is forbidden, unless the customer authorizes the broker in writing to do so. Unauthorized trades may often be voided and the losses recovered. "Churning" (Excessive Transactions)Engaging in transactions solely for the purpose of generating commissions is a common abuse in the brokerage industry. In order to prove a claim of churning, however, the investor must show that the broker exercised actual or de facto control over the churned account and that the trading directed by the broker was excessive, in light of the customer's age, investment objectives, risk tolerance, sophistication, and financial well-being. An analysis of the account is necessary to determine the "turnover" in the account, based on the volume of transactions in a particular period of time, as well as the costs incurred in the account compared to the assets held. Excessive transactions are actionable if performed to enrich the stockbroker at the expense of the client. If you believe that you have been the victim of stockbroker or investment-advisor misconduct, contact an attorney at the Cleveland, Ohio, offices of Seaman & Garson today for a free case evaluation. Please remember that all claims have time limits, so if you think that you might have a claim, you should have your case evaluated at the first opportunity. Our Cleveland, Ohio, lawyers handle arbitration and litigation, representing clients in state and federal courts in Lorain, Akron, Canton, Painesville, Columbus, Cincinnati, Toledo, Dayton, Youngstown, Parma, and communities throughout Ohio, in addition to select cases nationwide. Please call (216) 830-1000 or e-mail our office with any questions or to arrange a free consultation. Has your client suffered a serious loss due to misconduct on the part of a stockbroker or investment counselor? We may be able to help. Seaman & Garson welcomes referrals from attorneys and accountants. *Typically our Cleveland law firm charges no attorneys' fees for business litigation services unless our clients benefit from those services through a successful settlement or verdict. However clients are responsible for expenses related to litigation. |
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