We are currently in a phase of massive market fluctuation. As is clear now, if it was not apparent before, the market is highly sensitive to world affairs, political changes, and global crises. The collective emotions surrounding the current worldwide Coronavirus pandemic, and the response from government and international agencies around the world, is certainly being reflected in the financial markets.
That is, of course, the risk you take when investing your money in the market. However, remember that you are taking a calculated risk.
Expected Market Risk vs. Unexpected Fraud or Mismanagement by a Financial Advisor
You know, as all investors know on some level, that the long-term financial returns of investing in the market typically outweigh any short-term losses. But there is always some risk involved. That is why it is good practice to invest regularly, try to have your financial advisor balance your portfolio so you can hedge some of your bets against an economic downturn, and try to manage your stress and concern during major market volatility of the kind that we are currently experiencing due to the Coronavirus.
All that being said, the kind of risk we do not account for is when your financial advisor does something that is not in your best interest, and/or when your broker or advisor puts their interests above yours. That is not the ordinary, to-be-expected, kind of investment risk. Rather, that is a wrongful act on the part of your broker or financial advisor for which you can obtain damages through a lawsuit or arbitration.
So, the short answer to the question, “Can I sue my financial advisor for investment losses?” is “Yes.” In this article, we will discuss the reasons for using your broker or financial advisor, and the mechanics of how to get your “day in court” when you are the victim of investment fraud, negligence or mismanagement.
If, after reading this article, you have additional questions on any investment fraud matters, we invite you to contact investment loss attorney Melanie Cherdack. Ms. Cherdack is an investment loss attorney who understands the plight of those who were victims of investment fraud. She has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients.
To learn more about whether you need an investment loss attorney for your current situation, then we invite you to contact us today on our online contact form, or by calling 888-768-2499. We are the investment fraud lawyers who are leveling the playing field for you.
There Are a Number of Reasons That Will Support Legal Action Against Your Financial Advisor
Losing money due to market fluctuation is, simply put, the risk of investing. Losing money due to wrongful conduct on behalf of your financial advisor, however, may provide grounds to take legal action against him or her. Here are some common reasons why an investor will take legal action against a financial advisor or broker.
1. Outright Fraud. Selling fake securities or products; or not using your money to buy securities at all.
2. Broker Negligence. Investing your money in a way that is not suitable for your investment objectives.
3. Broker Mismanagement. Investing your money or managing your account in a way that exposes you to undue risk, or failing to take action to reduce your exposure to market risks.
4. Impossible Promises. Making financial promises that are unrealistic, typically regarding fast returns on investment.
5. Due Diligence Failure. Recommending an investment without having done appropriate due diligence on the investment first.
6. Churning. Engaging in repetitive sales tactics that result in excessive commissions benefiting the advisor but not the investing client.
7. Oversight Failure. A brokerage firm’s neglecting to properly supervise the work of brokers and financial advisors.
8. Failing to Diversify. As noted, weathering a fluctuating market requires some diversification in a person’s portfolio. By overconcentrating, a client’s portfolio in one type of industry or security can be actionable.
9. Off-book Sales. Selling securities that are not held or offered by the financial advisor’s brokerage firm.
Thus, if you suspect that conduct like any of the above is occurring, then you may have grounds to institute legal action against your financial advisor and his or her investment firm.
Can You Go Straight to Court on an Investment Fraud Claim?
The answer to that question is likely “no.” It is most likely, that when you signed with a particular investment firm, they made you sign a number of papers, including a contract that guides the relationship between you and the investment firm.
Virtually all investment firms require that any disputes must first go through the FINRA arbitration process. As you may know, FINRA stands for the Financial Industry Regulatory Authority, which has regulatory authority over the investment firms in the United States that are FINRA members. FINRA also provides a process by which investment firms and their clients can litigate disputes.
Therefore, if your contract calls for disputes to be handled through the FINRA arbitration process, then you must seek damages for your investment loss through FINRA arbitration. There are certain circumstances in which you may go to court after a FINRA arbitration. However, in most cases, an arbitration is the final word on a particular dispute.
Be Sure an Investment Loss Attorney is in Your Corner When Making a Legal Claim
Whether you suspect that your broker or financial advisor lied to you about the risks of a certain investment, or you suspect that your advisor engaged in self-dealing, mismanagement or other wrongful conduct, you need the help of an experienced securities fraud attorney to assist you. We invite you to contact investment loss attorney Melanie Cherdack.
Because she has been in the trenches as a former Wall Street attorney, investment loss attorney Melanie Cherdack and her team of experienced attorneys have seen just about every type of investment fraud or investment scam. While almost every investment carries a degree of uncertainty and risk, you may have been unnecessarily exposed to such risk due to the actions of others.
If you have lost money due to investment fraud or simple broker negligence, it is crucial to hire a lawyer who fully understands this area of law. Former Wall Street securities attorney Melanie S. Cherdack represents individual and institutional investors who are unwitting victims of investment fraud and broker negligence. She heads up a group of attorneys who represent investors across the United States. Contact us by filling out our online contact form, or calling 888-768-2499.