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Investment losses do not always mean misconduct occurred. Markets fluctuate and risk is part of investing.
However, investors may have legal claims when losses result from:
• unsuitable investment recommendations
• misrepresentation of risks
• overconcentration in risky products
• excessive trading (churning)
• unauthorized transactions
• sale of complex products to conservative investors
When financial advisors place investors into investments that do not match their financial objectives or risk tolerance, the losses may be recoverable.
Most disputes between investors and brokerage firms are resolved through arbitration administered by the Financial Industry Regulatory Authority.
This process is commonly known as FINRA arbitration.
The process typically involves:
Investigation of the account and investment recommendations
Filing a Statement of Claim
Selection of arbitration panel
Discovery and document exchange
Arbitration hearing
Final award issued by arbitrators
Investors who successfully prove misconduct may recover a portion or all of their losses.
Investment loss claims frequently involve:
Financial advisors must recommend investments consistent with the investor’s risk tolerance and financial objectives.
Investors may be misled about risks, fees, or liquidity.
Portfolios heavily concentrated in a single product or sector can expose investors to excessive risk.
Brokerage firms may be responsible for failing to supervise advisors who engage in misconduct.
Certain investment products appear frequently in recovery cases:
• non-traded real estate investment trusts (REITs)
• private placements
• structured notes
• oil and gas partnerships
• variable annuities
• complex insurance-based investments
These products often carry high commissions and may be inappropriate for many investors.
Investors should investigate losses when they notice:
• guaranteed returns or low-risk promises
• excessive trading activity
• complex investments they do not understand
• concentration in a single investment product
• explanations for losses that appear inconsistent with the investor’s objectives
Mazer Law Firm represents investors who have suffered losses caused by broker misconduct and unsuitable investment recommendations.
The firm conducts detailed reviews of:
• brokerage account statements
• investment recommendations
• broker disciplinary histories
• suitability of investment strategies
When misconduct is identified, the firm may pursue recovery through FINRA arbitration.
If you believe your investment losses may have resulted from broker misconduct, you may have legal options.
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