The facts in each securities related claim are different. They involve different individuals, different circumstances, different lawyers, and different Panels, Judges, or Arbitrators. While there is no assurance that any client will obtain a recovery, or obtain a favorable award at the time of hearing, the following are representative claims where we have made successful recoveries on behalf of our clients:
- Disabled victim of medical malpractice action, investing proceeds with broker, where broker traded account excessively in speculative securities and options without client’s authorization, in margin resulting in the loss of the entire account.
- Proceeds of divorce settlement improvidently invested in speculative securities, without diversifying account, in complete disregard of client’s financial condition.
- Fraudulent sale of high yield junk bonds to unsophisticated widow.
- Fraudulent sale of worthless and illiquid direct participation programs to disabled physician resulting in the loss of substantially his entire life savings.
- Older executive fully vested in company stock options. Options exercised, and proceeds invested in technology and Internet related securities in complete disregard of customer’s stated investment objectives.
- Client advised to take early retirement by broker, investing client’s life savings in speculative securities on margin, result in substantial loss of entire account.
- Unauthorized trading of customer account belonging to a 82 widow on margin, in technology and other securities.
- The fraudulent sale of unsuitable and proprietary Class B mutual fund shares by a broker, to avoid breakpoints or quantity discounts associated with the purchase of Class A shares, so as to maximize the broker’s commissions.
- Illegal sale of unregistered promissory notes by a licensed stockbroker, outside of the approval of his firm, to senior citizens, and other retirees.
- The fraudulent sale of long term Certificates of Deposit to a younger couple under the guise that these instruments, subject to interest rate risk, were traditional bank CDs.
- The over-investment and unsuitable extension of margin, against a customer’s securities account where the customer needed access to the account to pay living an other expenses.
- The fraudulent sale of tax free annuities to widow in otherwise tax deferred retirement account, in an effort to garner excessive fees.
- The fraudulent sale of otherwise worthless “house” stocks by over-the-counter, boiler-room type brokerage firm to senior citizens and retirees.
Common Claims Against Brokers
Stockbrokers and investment professionals owe their clients the highest fiduciary duties, including the duty to act in the customer’s best interest and not to engage in self-dealing or conduct that is designed to benefit the stockbroker at the expense of the client. The stockbroker has a duty to place the client’s interests above the interests of the stockbroker or the stockbroker’s employer.
The federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects or special information in possession of a broker or the securities brokerage firm.
Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. A statement is material if it assumes actual significance in the deliberations of a reasonable investor. If a securities broker touts a particular security and makes a misstatement concerning an important contact with a company and a potential business prospect, or an upcoming earnings, or other announcement, which the broker either knows to be false or makes with a reckless disregard for the truth, these are misstatements.
Omissions, include, for example the announcement of an important contract, which in fact may be true, but fails to disclose that the company lacks the working capital or resources, which are required to perform on any such contract. A half truth is still a whole lie.
There are other forms of stockbroker misconduct, which are actionable under the law. These claims against stockbrokers for investment fraud or stockbroker fraud include Suitability, Excessive Activity or “Churning,” Margin Account Fraud, Unauthorized Trading, Breach of Fiduciary Duty, Financial Suicide, Mutual Fund Fraud, Failure To Execute, Failure To Supervise, or the sale of unregistered securities, and variable annuity fraud, where the offending brokerage firm may be responsible for damages.