Bilked and Bullied by Wall Street
While we know that investments always carry some degree of risk, that does not mean you should suffer losses because of the negligence, fraud, or misconduct of a financial advisor or a broker. If you suffer losses that you suspect may be the result of your financial advisor’s misconduct, negligence, or fraud, seek help at once from an experienced investment loss recovery attorney.
As a former Branch Chief in the Division of Enforcement of the Chicago Office of the Securities and Exchange Commission, Lisa Bragança has investigated fraudulent offerings, improper (unsuitable) investment recommendations, negligent supervision, and other types of financial industry misconduct.
Now, as an attorney who represents investors, Lisa Bragança has recovered millions – through arbitration and the courts – for investors who are the victims of financial industry misconduct. If you suspect that you may be the victim of fraud, negligence, or other broker misconduct, attorney Lisa Bragança can help. She can do a no-cost review of your investments and advise you whether you may be able to recover your losses.
Recovering investment losses can be a complicated process. When you work with an attorney to recover investment losses, the steps you take will depend on where your investment was lost and who was responsible for losing it.
Sometimes investors try to resolve disputes on their own and make mistakes that make it much more difficult to recover their investment losses. One of the biggest problems with talking directly with your financial advisor’s supervisor and compliance officer is that they will appear to be conciliatory but in reality, they will be getting you to say things that make it more difficult for you to win in litigation. Firm lawyers train brokerage firm staff to elicit admissions – statements that they will use against you – in these conversations while they seem to be very helpful and agreeable.
Often, brokerage firms will record your conversations. When they do this, they will get you to say things that will hurt you in litigation. Even if they do not make an audio recording of your conversation, they will take detailed, and very self-serving, notes of their conversations with you. They will send you letters that you don’t understand – and because you don’t object to what the letters say, they will say in litigation that you agreed to those statements.
By the time you talk to a lawyer, you may have unknowingly said things that make it much more difficult for you to recover your losses.
Brokers owe special duties to their customers. Those duties mean not only that a broker is prohibited from defrauding a customer, but that a broker must adhere to “just and equitable” principles and only recommend “suitable” investment products to customers. There are many other FINRA Rules that apply to brokers.
The fundamental duty that a financial advisor who works for a broker’s firm owes to a customer is called the “suitability” standard. Suitability means that a financial advisor can only recommend to a customer an investment product that is appropriate for that person. Suitability is based upon lots of things like income, total net worth, age, and risk tolerance.
A particular investment product might be suitable for a forty-year-old executive who is earning $200 000 a year and has five million dollars in an investment portfolio. That executive may have a high-risk tolerance and plan to work for many years so she can tolerate potential losses. That same product might not be suitable for somebody who is seventy years old, retired, is not earning an income, and has a million dollars in savings for retirement.
That retiree is not in a position to tolerate the same losses that the executive can tolerate. A broker violates the suitability rule when he recommends the investment product to the seventy-year-old retiree, but not to the executive. Under FINRA rules, a broker is not permitted to recommend that investment to the retiree, no matter how great the broker thinks the investment is.
The small print on the back of your brokerage account statement will usually tell you that all disputes you may have with your financial advisor and his firm must be settled through FINRA arbitration. FINRA (the Financial Industry Regulatory Authority) is the self-regulatory organization responsible for enforcing FINRA rules and securities laws. FINRA also examines broker-dealers, registers broker-dealers and their registered representatives, and operates the mandatory arbitration dispute resolution system.
Customer disputes that are filed with FINRA Dispute Resolution may be heard by one to three arbitrators. The decision of the arbitration panel is ordinarily final and cannot be appealed.
If you have an account with an investment advisory firm, you are generally required to bring claims for losses to arbitration conducted by either AAA (American Arbitration Association) or JAMS (Judicial Arbitration and Mediation Services).
Customer disputes that are filed with AAA or JAMS may be heard by one to three arbitrators. AAA and JAMS have their own procedural rules, but the decision of one of these arbitration panels is ordinarily final and cannot be appealed.
Claims against insurance companies, issuers of securities, and others sometimes can be filed in a court of law.
Investors who are seeking to recover losses from a broker or from a financial advisor are usually compelled to submit their claims to arbitration by FINRA. In many cases, FINRA arbitration will be faster and less costly than going to court.
Once a “Statement of Claim” is filed with FINRA, the parties are given a list of potential arbitrators to rank. This is an important process. An experienced investment loss attorney knows how to research and evaluate the potential arbitrators on the list. Once FINRA receives the arbitration ranking forms from all parties, FINRA selects the panel of one to three arbitrators, depending on the amount of losses.
Customers and brokerage firms are required to produce certain types of documents. As a customer, you will have to produce brokerage statements for the accounts in question, statements for other investments, communications with the broker, and other documents. The broker is required to produce certain documents to you such as brokerage account statements, all communications with you, and internal communications concerning your accounts. Depositions are rarely allowed in FINRA arbitration.
Arbitration hearings are like less formal trials. The rules of evidence do not apply, but arbitrators often consider those rules in weighing evidence. The hearings start with opening statements. Then the customer calls witnesses and presents evidence. The broker’s attorney may cross-examine witnesses. Once the customer finishes, the brokerage firm presents its witnesses and evidence. Usually, there are closing arguments at the end of the hearings. Then the arbitrators adjourn the hearings and reach a decision.
That decision is almost always final and binding. Only in the rarest cases is a FINRA ruling reversed by a court.
Some investment advisory agreements require arbitration but do not specify an arbitration forum. In such situations, discuss with your attorney whether you should seek arbitration through FINRA or through another arbitration forum.
Investment advisory firms typically require that customers agree to submit all disputes to binding arbitration through AAA or JAMS. In many respects, arbitration through either AAA or JAMS is similar to FINRA arbitration.
JAMS and AAA arbitrations can be more costly than FINRA arbitration because of the filing fee costs and the hourly fees for arbitrator time. However, the investment advisory firm must cover most of the costs of arbitration if your claim is deemed a “consumer dispute.”
According to the AAA, a consumer dispute is a dispute that involves a consumer agreement, which is: “… an agreement between an individual consumer and a business where the business has a standardized, systematic application of arbitration clauses with customers …”
JAMS defines a “consumer” as someone who seeks or acquires goods or services primarily for personal or household purposes, including the credit or banking transactions associated with those purchases.
In consumer dispute cases arbitrated by AAA or JAMS, most of the cost of the arbitration is borne by the firm. That’s why it is important to determine whether or not your claim is considered a consumer dispute.
An investment loss recovery lawyer can determine whether or not your claim should be filed as a consumer dispute, explain your options, and help you decide on your next step.
Unless arbitration is mandatory, filing a lawsuit in state or federal civil court may be your best option for recovering investment losses. Depositions are not usually allowed in arbitration proceedings, but depositions may help you obtain the evidence you need to prove your claim.
Depositions are an expense, of course, and depositions are only one of the costs associated with taking your claim to court. Discuss filing a lawsuit – and your other options – with your attorney before you take any other step to recover investment losses.
Investors who’ve suffered losses because of the fraud or misconduct of a trusted financial advisor often feel betrayed or blame themselves. They often do not know where to turn. If you suspect that you have suffered losses because of fraud, negligence, or other misconduct, get an attorney’s advice as quickly as possible.
Investment loss recovery attorney Lisa Bragança understands how you can feel betrayed when a trusted financial advisor improperly handles your investments or intentionally takes advantage of you. Your plans for your retirement, your family, and your future could be completely derailed.
Contact Bragança Law LLC at (847) 906-3460, or use the contact form here on our website. If you’ve suffered investment losses because of fraud, negligence, or other broker misconduct, Attorney Lisa Bragança will fight to recover your losses.
Fill out the contact form or call us at (847) 906-3460 to schedule your free consultation.