Unfortunately, we do not live in an ideal world and nothing makes a broker’s blood run cold (or perhaps hot) more than a damages claim. The amount of money involved is generally not trivial and there is often a fear of “the floodgates opening,” as you are probably not the only client who felt themselves to be similarly deserving of restitution. If we think you might have a case, we will need to review a few basic documents. If we determine you have a case, then you will have the option to hire us as your attorneys to pursue it. Unless an investor wants to gamble with his portfolio, it should be properly diversified. It should hold a wide variety of investments so that no single investment can cause significant harm to the portfolio.

The fiduciary duty holds financial advisors to a higher standard, requiring them to act honestly, ethically, and in your best interests at all times. They must not engage in any activities or relationships that could compromise their ability to prioritize your needs. This ensures that the advisor is working solely for your benefit and not for personal gain. One of the key roles of a financial advisor is to assess a client’s financial situation and develop a customized plan to achieve their goals. This involves gathering information about the client’s income, expenses, assets, liabilities, risk tolerance, and time horizon. Based on this analysis, the financial advisor will recommend appropriate investment strategies and financial products.

• If we think you might have a case, we will need to review a few basic documents.
• It’s worth noting that not all financial advisors engage in misconduct, and there are many trustworthy and reputable professionals in the industry.
• Second, once a financial advisor knows his client’s financial measurements, he should only recommend investments that are suitable (pun intended), that actually fit his client’s needs.
• This involves gathering information about the client’s income, expenses, assets, liabilities, risk tolerance, and time horizon.
• That helps limit the length of time that the battle with your brokerage can drag on.
• If you’ve experienced substantial losses in your investment accounts, it’s important to understand your rights and the legal options available to address these wrongs.

If you suspect misconduct has led to substantial losses in your investments, contact us today for a free consultation. By the end of this guide, you’ll have a clear understanding of your legal avenues for recovery and how to proceed if you believe your financial advisor has failed in their duty to you. You must consult an attorney with vast knowledge and experience representing investors who sustained huge losses to protect can i sue my financial advisor your rights.

Suing your financial advisor for bad advice is a serious decision that requires thorough evaluation and proper legal guidance. If you believe your financial advisor has acted negligently or committed fraud, it’s essential to take action to protect your financial interests. Consulting with experienced attorneys and understanding the legal process can help you navigate this challenging situation and potentially recover your losses. Under the Investment Advisers Act of 1940, certain investment professionals, including registered investment advisors (RIAs) and some financial advisors, owe fiduciary obligations to their customers.

What Are Examples of Broker Misconduct?

The stock market’s performance seems to dictate the economic trends in the United States. Experience continues to teach us that people rely on the markets’ performance to preserve their savings. Otherwise, individuals who placed money into accounts like 401(k)s could lose their retirement fund. Investing your money in securities is the fastest and most reliable way to grow wealth. Putting your money in a savings account with an interest rate near zero is not beneficial, even though you cannot lose that money. Intelligently investing in securities can help you protect your retirement nest egg, save for college or a rainy day fund, or grow an inheritance for your family.

Investor Rights and Legal Recourse

The typical FINRA arbitration, if it does not settle–and many do–typically takes about 14 months to complete. While this may seem like a long time, it is still quicker than civil lawsuits in most states, especially California, where most courts are congested and have a significant backlog. The longer you wait from the date of the misconduct, the more likely it is that any evidence you may have to support your claim will be lost or destroyed due to the passage of time. Thoroughly vet advisors before working with them, maintain clear communication throughout the relationship, and document any concerns in writing. While market losses are part of investing, unethical conduct should never be tolerated. If you believe your advisor has violated their professional obligations, there are several ways to bring this to the attention of the right authority.

If you lost money due to fraud or negligence on the part of your stockbroker, financial advisor, or investment firm, you may be able to file an investment fraud lawsuit. More likely, you may be required to address your claim through FINRA arbitration, as most investment agreements contain mandatory arbitration provisions. The duty of care requires financial advisors to exercise skill, diligence, and professionalism in their interactions with clients. This means they must possess the necessary knowledge and qualifications to provide competent advice. They should stay updated on industry trends, financial regulations, and best practices to ensure they can offer informed recommendations.

They can guide you on the appropriate steps to take, including gathering evidence, reporting the misconduct, or pursuing legal action. It is important to note that not every negative outcome or financial loss automatically indicates a breach of duty by a financial advisor. Investments inherently carry risk, and market fluctuations can lead to losses. However, if the advisor’s actions or omissions directly contribute to the losses or if they deviate from their obligations, it may be considered a breach of duty.

Ethical Standards and Violations

Likewise, by agreeing to arbitration, both sides largely surrender their right to pursue the beef in court. Arbitration claims in which the sides reach some sort of settlement usually take 12 months. Cases that go to an actual hearing–comparable to a court trial–take 16 months on average.

Understanding the Grounds for Suing Your Financial Advisor

• Advisors are held at a high standard, so any breach of trust or duty can be grounds for a lawsuit.
• Still, investing in securities like stocks, bonds, options, and other investment vehicles can be overwhelming and confusing to the average investor.
• If you believe that any of these scenarios apply to you or a loved one, you should discuss your legal options with an attorney as soon as possible.
• It is also sometimes possible to get “after-the-fact insurance,” which is not cheap, but it does mean your potential losses have a ceiling.
• Most attorneys handling securities fraud operate on a contingency fee basis, and in some cases, the attorneys will front costs and seek reimbursement if the case is successful.
• It may be possible to sue a broker or financial planner several years after the event which caused the financial harm.
• If you lost money due to fraud or negligence on the part of your stockbroker, financial advisor, or investment firm, you may be able to file an investment fraud lawsuit.

That process is customarily overseen by the Financial Industry Regulatory Authority. But critics of the system point out that arbitrators often have ties to the financial industry. Critics also claim that arbitrators’ dependence on the financial industry for assignments can lead to industry-friendly arbitration outcomes. It’s worth noting that not all financial advisors engage in misconduct, and there are many trustworthy and reputable professionals in the industry. However, being aware of the types of misconduct can help you identify warning signs and take appropriate action to protect your financial interests. Conflict of interest is another area where a financial advisor may breach their duty.

FINRA, or the Financial Industry Regulatory Authority, is a self-regulating organization governed by the Securities and Exchange Commission or SEC. FINRA certifies and disciplines financial advisors and provides investors a forum to settle their disputes through arbitration or mediation. If you’ve lost a significant amount of money in your investment portfolios, you could be wondering if you can sue your financial advisor or broker to help recover those losses. When a financial advisor makes a mistake, assess the mistake’s impact on your finances. Communicate with the advisor to understand the error and discuss possible remedies. Depending on the severity, you might need to file a complaint with their firm or regulatory authorities.

A Financial Advisor’s Duty of Care

Advisors should disclose any potential conflicts of interest that could compromise their ability to act in the client’s best interest. If the advisor fails to disclose their conflicts or fails to manage them in a way that prioritizes the client, it can be seen as a breach of their fiduciary duty. There are various ways in which a financial advisor can breach their duty to clients. If the advisor provides false or incomplete information that leads to financial loss, it can be considered a breach of their duty to provide accurate and reliable advice. Financial advisors must also take into account your individual circumstances, including your financial goals, risk tolerance, and time horizon, when making recommendations. The advice they provide should be tailored to your specific needs, ensuring that it aligns with your overall financial objectives.

Section 10(b) of the Securities and Exchange Act of 1934 (the 1934 Act) established the minimum standards for financial advisers and brokers. The law protects investors from financial professionals who violate the 1934 Act by manipulating or deceiving investors. If you believe you’ve received bad advice from your financial advisor and are considering legal action, don’t hesitate to reach out to BLG.

Professionals who are committed to upholding high ethical standards and client-centric practices will typically disclose their fiduciary status and willingly provide information about their responsibilities. Financial advisors may work independently or be affiliated with a brokerage firm, investment advisory firm, or insurance agency. They typically hold professional certifications such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), or Registered Investment Advisor (RIA). To determine whether or not you have a potential claim against your financial advisor, FINRA suggests that discuss the matter with a qualified securities attorney. According to FINRA Rule and Rule 13206, a FINRA arbitration claim against your financial advisor must be filed within six (6) years of when the misconduct occurred. Financial advisors are entrusted with your assets, often representing decades of savings and hard work.

Below, we focus on possible disputes with your financial professional and how to deal with them. In arbitration, you might face filing fees ranging from $750 – $2,200 and additional costs for arbitrator’s fees, FINRA administrative fees, expert fees, exhibits and graphics expenses, among others. In litigation, expenses can be significantly higher due to the costs of depositions and other costs related to discovery and expert witnesses.

While the 70% figure for crypto communications is incredibly high, the normal figure of about 8% running afoul of FINRA regulations still indicates a need for vigilance. Advisors are prohibited from making false statements or omitting material facts about investments. This includes making specific price predictions or guaranteeing that you won’t lose money. If the facts about an investment opportunity prove significantly different from what your advisor told you, the advisor might have committed misrepresentation.

Otherwise, your portfolio gains could go to paying them instead of into your account. “We’ve been concerned about how communications discuss the protections offered through the federal securities laws or FINRA rules… However, there are no such protections for accounts held at crypto asset entities.” Experienced attorneys, like those at Sonn Law Group, specialize in navigating both arbitration and litigation processes. They ensure that all procedural requirements are met and aim to secure the best possible outcome for their clients. It is a private process where an impartial arbitrator hears the evidence and makes a binding decision, usually within months.