Too often, investors lose money in the stock market and don’t know what to do. The common question we receive is, “Can I sue my financial advisor?” The answer is yes. You can sue your financial advisor to recover losses.
One of the common reasons for financial advisor malpractice is the sale of investment products that are not suitable or were improperly sold to investors. Recently there have been many cases investors that purchased products that they didn’t understand the risks and were not traded on the exchanges. This has caused investors to lose a substantial amount of money.
Suing a financial advisor or broker is usually the only way to recover losses. For most investors, they are limited to filing claims against the financial advisor or firm through the Financial Regulatory Authority (FINRA). FINRA is a self-regulatory organization that is responsible for the registration, regulation, and enforcement of rules for the investment brokerage industry.
In most cases, suing or filing a FINRA claim against a financial advisor is done by investment fraud attorneys. A good investment fraud lawyer will spend time to fully understand your unique case and provide a free evaluation of the case. They will also offer several options to recover your losses.
Many times investors blame themselves for losses in the stock market; however, it may not be their fault.
Haselkorn & Thibaut have helped investors recover millions of dollars of investment losses. We are a nationwide law firm specializing in handling investment fraud arbitration cases.
The law firm has offices in Palm Beach, Florida, on Park Avenue in New York, as well as Phoenix, Arizona, and Cary, North Carolina. Call us today at 1-800-856-3352 to get a free investment portfolio review.
6 Steps to Sue Financial Advisors For Malpractice and Losses
- 1 6 Steps to Sue Financial Advisors For Malpractice and Losses
Determine if Your Financial Advisor Is Registered With FINRA
FINRA oversees over 630,000 financial advisors and brokers at over 3,700 broker-dealer firms. It operates as a regulator overseeing brokers, financial advisors and broker-dealer firms. FINRA is a self-regulatory organization (“SRO”) registered with the Securities Exchange Commission (“SEC”) as a national securities association and the nation’s only registered securities association as well as the nation’s largest SRO.
As an SRO, FINRA is part of the Exchange Act’s comprehensive plan for regulating the securities markets. Under the Act, the SEC must approve all FINRA rules, policies, practices, and interpretations before they are implemented, including the FINRA rules at issue in this matter. See 15 U.S.C. §78s(b).
Separate and apart from any regulatory functions, FINRA also operates an Office of Dispute Resolution. The Office of Dispute Resolution’s sole function is to operate an arbitration/mediation forum to resolve securities industry disputes between FINRA members and investors. Its authority and jurisdiction are limited to administering arbitrations/mediations.
FINRA customer dispute claims are often an attractive option for investors. These claims do not involve depositions, and are typically, faster, more efficient, and less expensive than many alternative forums available.
If your financial professional is (or was) registered with FINRA, you may have some additional options to consider. If you are not sure how to locate this information, or where to look, you should contact an experienced investment fraud and securities arbitration attorney and ask for assistance.
Do Not Delay.
If you have a claim, time is typically not on your side. Most jurisdictions will have statute of limitations that will define the length of time you can assert a claim before it is considered stale or expired. Some of these cut-offs can be relatively short. Although there are potential for tolling or other exceptions, and a longer eligibility period from bringing customer dispute claims with FINRA, investors need to be careful if they delay taking action.
First, there is the technical application of any statute of limitations or other legal cut-off after a certain time period. In addition, investors who later decide to pursue their claims, but who chose to wait are likely to have to overcome a credibility issue. For example, questions such as whether or not the investor “sat on their rights” or possibly took a “wait and see” stance are not criticisms, they may actually serve to de-value an investor’s potential claim.
Speak to An Attorney Before You Sue the Advisor.
Are you required to have an attorney? No, you can proceed on your own. Before you do so, be sure to look at the statistics showing the success rates in similar claims for investors who proceed pro se (on their own) and those who retain experienced attorneys. Also consider your ability to dedicate the time and effort to handle the claim, your ability to know and understand what documents you need to prove your claim, and your economic as well as other resources in the event you are best served by retaining an expert witness on damages or securities industry standards.
Some investors either based on overconfidence, anger, frustration, or sometimes over-simplifying the issues get frustrated or angry and they send one or more text messages or emails to their financial advisor or to the firm management.
Others start emailing state or federal regulators randomly believing that this will help them add pressure or prompt those agencies to address the fraud or malpractice. While retail investors may think this makes it more likely the firm will resolve issues voluntarily, or they are simply venting frustration and anger, the responses are typically not what they expected.
“Experienced counsel can assist you, if this is really the avenue you wish to pursue.”
Be careful! The suggestion to consult an experienced attorney is because these issues may not be as simple as they appear. We have seen too many investors with good, credible, strong claims write something in a stream of conscious email not realizing that in a civil dispute at a later date that email is going to be dissected for everything it does contain, or anything it failed to mention. You may have the best if intentions, but hitting that “send” button on your computer may negatively impact your case.
Experienced counsel can assist you, if this is really the avenue you wish to pursue, so that you do not do or say anything that will later de-value your claim. There are good, experienced attorneys out there who you can retain on an hourly basis to help guide you in this process, and if you are not interested in incurring fees and expenses there are attorneys who will handle these types of matters on a contingency fee basis. Even the best attorneys cannot put the toothpaste back in the tube after you hit the “send” button.
This is not only an issue for emails, letters, text messages, or traditional forms of correspondence, it also applies to online reviews. Just as you should not put your thoughts in an email without checking with an attorney first, you should not go online and provide ratings or comments that can be traced to you.
If you are not careful, your otherwise strong case, could result in a misguided effort to impugn someone’s reputation or a firm’s reputation out of anger or frustration can become a claim against you for defamation, or could be used as a credibility issue against you later in a different context. Don’t let a momentary lapse or an emotional knee-jerk reaction impact your potential claim, or the amount of damages you might be able to recover later.
If your anger or frustration has gotten the best of you, consider emailing your attorney a confidential memorandum. All of the facts, details, issues, etc. may be important in helping you address your claims and seeking a recovery of damages.
Consider…Should You Rely on Regulators?
Securities regulators, whether they be state level offices of financial regulation or division of securities, as well as federal regulators such as the Financial Regulatory Authority (FINRA) or the Securities & Exchange Commission (SEC) serve a very important role.
While they do investigate legal and regulatory violations, often following up on investor complaints, individual investor restitution is often not their sole or even primary purpose or goal. Even when it is, efforts on the part of regulators can be too little, too late for the individual investor victims, or it can take years before there are tangible results.
Your individual focus and the focus of the regulatory body investigating any issues may not always be focused on the exact same goals.
While an experienced attorney may advise you to cooperate with regulators while pursuing your claim, that attorney will be focused on what is most often your individual, civil dispute seeking a damage recovery as quickly and efficiently as possible. In short, your individual focus and the focus of the regulatory body investigating any issues may not always be the same.
While some regulators are more consumer-oriented than others, whether this is your best opportunity for a personal financial recovery of an investment loss is a decision you should discuss with your attorney.
Begin Interviewing Potential New Financial Advisors.
As a victim of investment fraud or financial advisor malpractice, your trust has been broken. The prospect of having to address that reality with someone you once liked and trusted as a professional can be extremely uncomfortable. Well, there’s good news, you don’t have to do that, it’s not how the securities industry works today.
In most cases, your new financial advisor will be able to prepare an ACAT form or automated transfer form for you to sign, and you will not be required to meet with your former financial advisor, no need to explain anything to him/her, or any need to justify your decision – just sign the form and your account will transfer automatically. In addition, to the extent you may receive telephone calls, emails, or text messages from your prior firm or prior financial advisor, your new financial advisor, as well as your attorney, will help you handle the responses to these messages.
Hopefully you have a new financial advisor in place. If not, as you begin this research, always consider checking out your prospective financial advisor with FINRA Brokercheck and the SEC before making any final decisions.
For most victims of investment fraud or financial advisor malpractice, there is a mixture of emotion as well as the practical issues that need to be addressed. This is a complex area of the law involving a highly regulated industry and the details, technicalities, industry standards are likely unfamiliar to you.
First, try to catch your breath. Second, begin by starting to gather your hard-copy and electronic documents. Were there account statements you filed away? Where are they located? Do you have emails or other correspondence, are there hard copies, are there text messages or emails on your mobile phone, I-pad or personal computer?
Finally, as you begin to recall these issues, as the events and circumstances are on your mind, you will undoubtedly recall meetings, discussions, and other details. Keep a pen and pad handy and create a memorandum to counsel. This will help when you speak to your attorney as it will streamline your confidential discussions with your attorney, help you put the timeline in order, and assist you in recalling or identifying key dates, issues, events and documents.
Do not underestimate how helpful these types of notes can be, but be sure that you label this properly as a memo to Counsel. Your notes may be subject to discovery at a later date if you file a claim or customer dispute, so be sure to consult with an attorney and make sure these are privileged and confidential records you are creating in anticipation of litigation and for purposes of communicating with your attorney.
Haselkorn and Thibaut, InvestmentFraudLawyers.com, specialize in fighting for investors. We have over 45 years of experience and 95% success rate. Call us now for a free consultation at 1-800-856-3352. No Recovery, no fee.