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If you regularly invest in the stock market, you may rely heavily on your broker to buy, sell, and give important financial advice on your investments. You put so much trust into your advisor, it could be unthinkable to imagine they are acting in bad faith—and that their true motive in suggesting trades is only to line their own pockets.
Unfortunately, for some investors, this is exactly what they discover. Unscrupulous advisors can take advantage of clients for their own financial gain, charging excessive commissions, or engaging in other financial misconduct. They could also push unsuitable investments or narrowly focused portfolios, leaving you with heavy financial losses.
If you believe you could be the victim of financial investment fraud, contact Morgan & Morgan. Our Business Trial Group includes experts in discovering broker negligence and misconduct; if we investigate and find it, we may be able to help you restore justice and win compensation.
If your investment balance sheet seems suspicious, you may be wondering if taking legal action is right for you. An experienced lawyer can help you decide by exploring two important factors: first, would your case meet the burden of proof; and second, what type of financial misconduct occurred?
What Is Needed to Meet the Burden of Proof?
To convince the court that you are the victim of fraud or negligence, you must establish the following:
- The defendant owed the plaintiff a duty of care: FINRA and the SEC have established that brokers owe their clients a fiduciary duty of care. Plaintiffs must prove that they had a broker/client relationship with the defendant.
- The broker breached their duty of care: The plaintiff needs to prove how their broker-dealers violated their fiduciary duty—for example, showing that they engaged in excessive trading to run-up their own commission fees.
- The plaintiff suffered financial losses as the result of this breach: The breach in question must have caused provable financial damages. This could be demonstrated with financial records detailing unwarranted fees or unapproved investments that lost money.
What Are Some Types of Misconduct?
Negligence or fraud on the part of broker-dealers can cause significant losses. A Morgan & Morgan attorney can help review your financial records for irregularities and misconduct, such as:
- Unsuitability: A financial advisor is legally obligated to know their clients’ risk tolerance and invest accordingly. If advisors and brokers ignore your risk preferences, they may be liable for damages.
- Churning: Brokers receive commissions on most trades; churning is when they trade more than necessary to drive up their own fees. Plaintiffs who can prove this occurred could be compensated for their losses.
- Over-concentration: This process occurs if your broker left your portfolio vulnerable by either recommending a narrow range of securities or focusing on only one economic sector.
- Unauthorized trading: Brokers and advisors must obtain their clients’ permission before trading. Any financial professional who makes unauthorized trades and loses money could be sued for misconduct.
- Ponzi schemes: In some extreme cases, brokers and advisors engage in harmful, malicious, or illegal conduct such as Ponzi schemes. Contact a lawyer right away if you believe this has occurred; your attorney will alert the authorities and pursue legal action.
Can I Afford a Lawyer?
If you have already lost money because of a broker’s misconduct, you may wonder how you can afford an attorney.
When you choose Morgan & Morgan, you never have to worry about legal expenses. That’s because we work on a contingency basis, so you pay nothing out-of-pocket for our services. Your consultation is free, and there’s never a fee at all unless we win your case.
Contact Morgan & Morgan
We understand that losing money to a formerly trusted advisor can leave you feeling betrayed and confused, in addition to coping with serious financial losses. The attorneys at Morgan & Morgan can help. Our experts at the Business Trial Group know exactly how to prove investment fraud and will fight for all the compensation you deserve.
When you put Morgan & Morgan in your corner, you’re not just hiring one lawyer: you are tapping into an army of 800 lawyers and 3,000 team members ready to fight for you. We have the experience, expertise, and resources to help recover your losses and bring you peace of mind.
We fight for the People, not the powerful—and have won $13 billion so far for clients across all areas. Find out for yourself why there’s only one Morgan & Morgan. Complete our free, no-risk case evaluation form, and one of our lawyers will contact you.