In a recent development, Sanford Schmidt, a broker and investment advisor associated with The Leaders Group, Inc. (CRD 37157) in Colorado, has been named in a customer dispute filed on February 1, 2024. The allegations against Schmidt include violations of the Securities Law of 1953, the Illinois Consumer Fraud and Deceptive Business Practices Act, fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty, and unjust enrichment.
The customer, identified as CBL, has alleged that Schmidt violated multiple sections of the Securities Law of 1953, specifically 815 ILCS 5/12(f), (g), and (j). These sections deal with various forms of misconduct, such as engaging in fraudulent transactions, obtaining money through prohibited means, and employing manipulative or deceptive devices.
Additionally, Schmidt is accused of violating the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2, which prohibits unfair or deceptive acts or practices in the conduct of trade or commerce. The allegations also include claims of fraudulent misrepresentation, negligent misrepresentation, breach of fiduciary duty, and unjust enrichment.
According to a Forbes article, investment fraud and bad advice from financial advisors can have devastating consequences for investors. It is estimated that investors lose billions of dollars each year due to fraudulent activities and misconduct in the financial industry.
Understanding the Allegations and FINRA Rules
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The allegations against Sanford Schmidt involve various forms of misconduct that violate both state securities laws and FINRA rules. The Securities Law of 1953 and the Illinois Consumer Fraud and Deceptive Business Practices Act are designed to protect investors from fraudulent and deceptive practices in the securities industry.
FINRA, the Financial Industry Regulatory Authority, is a self-regulatory organization that oversees the activities of broker-dealers and their associated persons. FINRA Rule 2010 requires brokers to observe high standards of commercial honor and just and equitable principles of trade. Additionally, FINRA Rule 2020 prohibits brokers from effecting transactions in, or inducing the purchase or sale of, any security by means of manipulative, deceptive, or other fraudulent devices or contrivances.
Fraudulent misrepresentation occurs when a broker knowingly provides false information to an investor, while negligent misrepresentation happens when a broker fails to exercise reasonable care in communicating information. Breach of fiduciary duty refers to a broker’s failure to act in the best interests of their clients, and unjust enrichment occurs when a broker wrongfully benefits at the expense of their client.
The Importance for Investors
The allegations against Sanford Schmidt serve as a stark reminder of the importance of working with trustworthy and ethical financial professionals. Investors rely on their brokers and investment advisors to provide accurate information, sound advice, and act in their best interests.
When a broker engages in fraudulent or deceptive practices, it can have severe consequences for investors, leading to significant financial losses. Investors must remain vigilant and take steps to protect themselves from potential misconduct.
Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating Sanford Schmidt and The Leaders Group, Inc. The firm has over 50 years of combined experience and a 98% success rate in helping investors recover losses through FINRA arbitration.
Red Flags and Recovering Losses
Investors should be aware of red flags that may indicate financial advisor malpractice, such as:
- Unauthorized trading or excessive trading (churning) in client accounts
- Recommending unsuitable investments or strategies
- Misrepresenting or failing to disclose material information about investments
- Failing to diversify client portfolios or overconcentrating in certain securities
If you suspect that you have been a victim of financial advisor malpractice, it is crucial to act promptly. Contacting an experienced investment fraud law firm like Haselkorn & Thibaut can help you understand your rights and options for recovering losses.
FINRA arbitration is a faster and more efficient alternative to traditional litigation for resolving disputes between investors and financial professionals. Haselkorn & Thibaut offers free consultations to investors and works on a contingency basis, meaning there are no fees unless they successfully recover losses on your behalf.
To discuss your case with an experienced investment fraud attorney, call Haselkorn & Thibaut‘s toll-free number at 1-888-885-7162 or visit their website for more information.
As the investigation into Sanford Schmidt and The Leaders Group, Inc. unfolds, it serves as a critical reminder for investors to remain vigilant, conduct thorough research, and seek the guidance of trusted professionals when navigating the complex world of investing.
