She never explained anything: Im a senior citizen and I lost $100,000 in the stock market this year Can I sue my financial adviser?

can i sue my financial advisor

If these breaches of duty are provable, the “merits of the case” are strong, as a lawyer would say. Unfortunately, there are instances where investors lose money due to the negligence or fraud of their financial advisors or brokers. In many cases, an investor harmed by negligent acts
will have a claim against both the broker and the firm that employs the broker. Advisors also owe their clients a duty of loyalty and are obligated to
act in good faith, which means that they must act in a client’s
best interest. While brokers do not owe a fiduciary duty to their clients,
they nonetheless are required to avoid causing their clients financial
harm. This means that brokers must recommend investments that
are suitable to the client’s financial goals, resources, and risk

People hire financial advisors and brokers to grow and protect their money. Financial advisors have advanced education and training, which should provide their clients with valuable insight and accurate financial advice. Individual investors expect that their advisors will not defraud or harm them in any other way. Brokers and financial advisors do not need to commit
fraud or act with malicious intent to be held accountable for the harm caused by their
broker misconduct.

And if your advisor purposefully misleads you, makes material misrepresentations about your finances or his or her services, or otherwise misappropriates your funds, you may be able to sue your financial advisor for fraud. Investment advisors, under state law and SEC regulations, are held to a fiduciary standard, meaning that their actions must be performed for the advantage of the beneficiary, i.e., you. And a new Department of Labor rule extends that duty to retirement advisors as well.

How will my claim be resolved?

Clients may seek compensation if they can prove that their financial advisor did not act on a requested action or service. For example, if the client asks the financial advisor to invest in a particular investment and the advisor fails to do so, thereby resulting in a missed opportunity, the client may sue for a deficiency in service. Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that they can determine the risks and rewards of the investment or investment strategy. This means that a fiduciary relationship exists between the financial advisor and their client.

In some cases, investor lawsuits and arbitration claims involve allegations of outright theft or forgery of documents. Federal laws and regulations impose a
fiduciary duty on financial advisors, which essentially means that they are required
to put their clients first. Specifically, financial advisors are obligated
to disclose any potential conflicts of interest and explain the benefits
and detriments of a particular investment. Has your financial advisor made an investment recommendation to you that was not suitable or appropriate for your investment objectives, risk tolerance, age, or net worth?

The law protects investors from financial professionals who violate the 1934 Act by manipulating or deceiving investors. For over 40 years, Robert has fought for investors who fell prey to negligent financial advice. Robert and his team have extensive experience holding brokers and financial advisors liable for misconduct and negligence in Florida and across the United States. The nature of a claim may vary depending on whether you are suing a broker or financial advisor, their legal professional standards, and whether they work independently or for a large company.

Do I need a lawyer to sue my financial advisor?

I have worked with Robert Pearce on dozens of matters and have always been impressed by his creativity, energy and professionalism. Bob is one of the few very best lawyers I have worked with during my 30 year career. FINRA will enforce the award if you win in arbitration, just like a court will enforce a judgment. The arbitrators listen to witnesses testify, review exhibits, and determine credibility when ruling on a case. Like jurors in a court of law, the arbitrators find the facts according to the testimony and then apply them to the law. Such cases are often complex, invariably very time-consuming, and truly draining on all of one’s resources; financial, mental, and physical.

Can a financial advisor be liable?

When Can Financial Advisers Get Sued? Financial advisers are fiduciarily responsible for safeguarding their clients assets and acting in their best interests. If the adviser can demonstrate that their actions were well-intended regardless of the outcome, the financial adviser is often not guilty of any crime.

Not all financial advisors or brokerage firms owe the same legal duties to their clients. You must consult your investment loss recovery attorney for advice if your investment broker or advisor is a registered investment adviser. Negligence claims often accompany other claims in a securities lawsuit,
such as misrepresentation, unsuitability, breach of fiduciary duty, and
fraud. The securities laws, both at the state and federal level, offer protections to investors. Moreover, the Financial Industry Regulatory Authority (FINRA) has promulgated rules that govern registered financial advisors. The securities laws and FINRA rules provide the contours of the investment relationship with a customer like you.

In these cases, the brokerage could be held liable for actions committed by the advisor that would have been detected and prevented had they been properly supervised. Recently there have been many cases of investors purchasing products that didn’t understand the risks and were not traded on the exchanges. This has caused investors to lose substantial money because of bad advice or securities fraud from financial advisors. Arbitration and mediation with FINRA do not necessarily mean that the investor is at a disadvantage. FINRA’s arbitrators will hold financial advisors to the highest professional standards and not necessarily side with the investment advisor. In theory, if you have lost money because your broker (or any financial institution) gave you bad advice, mismanaged your investments, misled you, or took other unlawful or unethical actions, you can sue for damages.

Note that if you decide to file a lawsuit, the court in which you file suit will have strict procedural rules in place, and you will be required to adhere to those rules. Court cases tend to be more expensive than arbitrations, and often take far longer to resolve than do arbitrations. That said, common wisdom finds that juries are often (but not always) more generous than are arbitrators. Whether the benefits of a jury outweigh the costs of pursuing a claim through the court system is an analysis that requires great experience in both forums. Legally, brokers need to have the express legal authority to execute trades on their client’s behalf.

Firm’s attorneys are often well-versed in financial advisor conduct and the industry. In order to build a strong case against your advisor, you may need a lawyer who is just as, if not more, experienced that your advisor’s defense. Your ability to recover your losses due to financial advisor malpractice is dependent on a number of factors. Where and how you can sue your advisor changes depending on federal and state laws, the investments you hold, and the terms of the customer agreement or contract you signed when you began working with your advisor. While a single financial advisor may have chosen to commit misconduct, the brokerage firm could be held liable if they did not have a proper supervisory system in place to oversee the advisor and protect their clients.

These claims usually start by showing that the defendant was required to abide by some standard of care in his or her interactions with the plaintiff. Next, the plaintiff needs to prove that the defendant failed to live up to this requirement, and that this breach led directly to harm and damages. There will be a paper trail, but it does not seem likely that your adviser can be sued for not reaching out to you as often as you might like, even in a turbulent market such as this. Generally, as you near retirement your investments should be more conservative. Another common reason why your financial advisor could be sued is because of investment fraud. This is a broad term that refers to any deception or scheme related to an investment drafter to take your funds.

How to Sue Your Financial Advisor or Broker Over Investment Losses

There’s no regulatory agency that oversees “financial advisors.”  It’s a marketing term, meant to engender trust. If there is a pre-dispute arbitration clause within the agreement that you signed with your broker or brokerage firm, it will almost certainly be enforced. This means that you will be required to seek compensation through the FINRA arbitration process.

Our securities lawyers specialize in financial advisor misconduct. If your financial advisor has engaged in any form of fraud or negligence, you may be able to file a complaint or sue your advisor to recover your losses. Generally, investors can sue their financial advisors over negligence through arbitration or civil lawsuits.

If your financial advisor has a fiduciary obligation, and has engaged in any type of fraud that benefits him or herself at the expense of your investments, it can be deemed a breach of fiduciary duty. The first step we would take is to determine if your financial advisor has a fiduciary obligation by looking him or her up on the FINRA website. Then we would review your portfolio and look for indicators of breach of fiduciary duty including commingling of assets, conflicts of interest and incomplete records. Financial advisors, investment advisors, and financial planners are required by law to handle their client’s money responsibly and refrain from committing fraud or other forms of misconduct. Investment advisors have a duty to properly care for their clients and work in the client’s best interest.

Settlement vs. FINRA Award: What’s the Difference?

Anyone who has been the victim of stockbroker fraud or broker negligence should be entitled to receive full and fair compensation for any of their financial losses. However, winning these cases and obtaining compensation can be incredibly challenging. A broker may breach this duty by recommending financial investments that are not consistent with their client’s investment goals or financial interests. can i sue my financial advisor The broker must be a direct cause of the injury to the client in order for the client to recover damages. If you have questions about securities law or are thinking of suing your financial advisor, you may want to consult with an experienced consumer protection attorney beforehand. If your malpractice claim is successful, the financial advisor may need to reimburse you for any losses.

You must consult your investment loss recovery attorney right away to discuss this question thoroughly. The answer depends on the legal agreement you had with your broker. Still, investing in securities like stocks, bonds, options, and other investment vehicles can be overwhelming and confusing to the average investor. Therefore, seeking a financial advisor’s advice to steer you toward the right investments is the smart thing to do. In the rare case in which your investment agreement does not contain an arbitration clause, you can file a court case.

can i sue my financial advisor

If you lost money on investments based on a broker’s or financial advisor’s advice, you could have the right to sue the brokerage over losses. Robert Wayne Pearce and his team with the Law Offices of Robert Wayne Pearce, P.A., have recovered over $160 million in stock market losses for his clients. In the financial world, investment losses occur daily and financial advisors often fail to live up to their professional duties. As we know, every investor is unique as are his or her objectives. For example, you might have a high-risk tolerance, while someone else has a low tolerance for risk. A financial advisor’s job is to provide investment advice and recommendations that are the best fit for your objectives.

And those considering hiring an investment advisor would be well served to check the SEC’s Investment Advisor Public Database for similar information regarding prior violations. If you have fallen victim to financial fraud or broker misconduct, don’t suffer in silence. Call ELK-OHIO or contact us online for a free, no obligation case review. You have six years to file a statement of claim, but it is best not to wait. Records tend to get lost, and it’s better to file your complaint when you can still remember where to find all your information. If your broker failed to perform their due diligence when they recommended a security or failed to appropriately manage your investing strategy, you may have a case for broker negligence.

If your broker makes transactions without your approval and you lose money in the process, you can be entitled to compensation. Our goal with this article is to provide you with much of the information you’ll need to decide whether to sue your broker or financial advisor. Suitable investments take into account an investor’s financial goals, age, risk tolerance, tax status, and investment horizon. Brokers are not allowed to recommend risky investments to customers who have stated that they want reliable investments. I am a senior citizen and have suffered major losses to the tune of $100,000 in the recent stock market turmoil. I understand the dynamics of the market as far as its ups and downs, and have ridden them out before.

  • Many investors retain financial advisors and brokers to help them invest their hard-earned money.
  • Elk & Elk works on a contingency-fee basis, which means there is no attorney fee unless we obtain compensation for your losses.
  • This means that the client was aware of the turbulent nature of the market but still desired to proceed with the investment anyway.
  • Separate and apart from any regulatory functions, FINRA also operates an Office of Dispute Resolution.

Thus, the key difference in services offered is who actually puts the trades through. If you have a viable claim for negligence or fraud, you can file a lawsuit against your broker, your advisor, or the firm for which he/she/they work. Before you file, however, you must review the contract you signed when you first became a client. Many investment firms mandate that investors seek damages through arbitration. If your contract contains such a clause, you will not be able to file a lawsuit in court but must file a Statement of Claim in arbitration. Some investors are concerned about the prospect of paying an hourly rate or having to pay out-of-pocket in advance for legal representation to sue their financial advisor.

‘She never explained anything’: I’m a senior citizen and I lost $100,000 in the stock market this year. Can I sue my financial adviser? – MarketWatch

‘She never explained anything’: I’m a senior citizen and I lost $100,000 in the stock market this year. Can I sue my financial adviser?.

Posted: Wed, 21 Sep 2022 07:00:00 GMT [source]

We have been representing parties in securities arbitration
and litigation for over 25 years, and our dedicated legal professionals
will assertively pursue the full amount of damages that you can recover
for your harm. No one should have to suffer as a byproduct of dishonest, untrustworthy, and self-interested financial advisors and brokerage firms. These individuals and companies owe you a fiduciary duty to always put your interests first, disclose important information to you, and act as a fiduciary to you at all times. 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.

What happens when the investment itself doesn’t line up with your investment objectives and risk tolerance? In this article, I want to share with you the most common reasons financial advisors are sued. While every situation is different, these items below are indicators that you have a promising claim against your financial advisor. Financial and investment advisors often take advantage of investors in a variety of ways.

  • State, federal, and regulatory statutes of limitation may apply to your claims.
  • Those who are considering hiring a new broker should check their background and history on FINRA’s BrokerCheck to ensure no prior history of FINRA violations.
  • In order for the claim to be successful, you must demonstrate that the
    broker had a duty of care towards you as their client and breached it
    through negligent behavior.
  • An in-house financial advisor is required to comply with the same professional and ethical standards for financial advising as an outside advisor.

Investors who lost money and want to sue their financial advisor must know the applicable statutes of limitations. Statutes of limitations protect people against lawsuits based on allegations that occurred years before. Key evidence might go missing, or witnesses’ memories could fade over time. Therefore, courts want lawsuits filed in court shortly after the event giving rise to the allegations occurs. Some brokerage firms and financial advisors include binding arbitration clauses in their contracts.

What happens when a financial advisor makes a mistake?

Brown says the National Association of Personal Finance Advisors steps in after a client has taken action with the appropriate regulatory agency. Once you have filed your complaint, you can contact a lawyer and choose arbitration or litigation to recover any losses.

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