Stockbrokers owe specific duties to their clients. A broker has a duty to observe a high standard of fair dealing with his or her customers. Fair dealing includes disclosing accurate and truthful information. If you have suffered financial losses because your stockbroker did not disclose accurate and honest information by eliminating the discussion of potential risk, you could have a cause of action against your stockbroker to recover your losses. Erez Law can help you recover your losses caused by your stockbroker not fulfilling his or her duty to discuss the potential risk of an investment. Our misleading or incomplete stock information attorneys have a 99% success rate, and we have recovered more than $150 Million for victims of investment fraud.
How Stockbroker Conduct is Governed
The conduct of stockbrokers is governed by FINRA (the financial industry regulatory authority), federal laws, state laws, and court decisions. This complex array of laws is complicated to navigate for anyone other than an experienced stockbroker fraud attorney. A victim of fraud can file a claim against a broker without retaining a lawyer; however, the possibility of an unrepresented victim recovering losses incurred by fraud is minimal. Stockbrokers and their brokerage firms have the financial resources to retain large law firms to vigorously defend themselves. It would be almost an impossible task for an unrepresented victim to pursue litigation against one of these large firms with practically limitless resources.
Why Choose Us?
Erez Law is a preeminent investor fraud law firm that has represented victims of investor fraud or stockbroker fraud throughout the United States and Latin America for more than 20 years. Our attorneys at Erez Law have a thorough understanding of investor fraud and stockbroker fraud laws. Our lawyers only represent victims of investor fraud and stockbroker fraud. Our practice is exclusively dedicated to recovering losses on behalf of stockbroker fraud and investment fraud victims. Our firm has the resources to fight the giant law firms that are retained by brokerage firms, big corporations, and banks. We will not back down to these big law firms. We will fight vigorously to reach our objective of recovering your losses. There is no obstacle that these big firms can throw in front of us that we are incapable of overcoming. There is a reason that we have a 99% success rate.
Discussing Potential Risks
According to FINRA, the agency that governs the conduct of stockbrokers, a stockbroker owes a duty of fair dealing with his or her customers. Fair dealing includes disclosing accurate and truthful information. Among accurate and truthful information, there must be a discussion between the stockbroker and the investor regarding the potential risk of the investment. Eliminating the discussion of potential risk is a violation of one of the duties that the stockbrokers owe to investors. Furthermore, according to federal laws and state laws, stockbrokers and brokerage firms are liable to investors for making misrepresentations. According to the applicable laws, omission of relevant information is the same as a misrepresentation. By not disclosing the potential risk of an investment, the stockbroker is making a misrepresentation that is in violation of the federal and state laws as well as the agency rules.
According to the FINRA rules governing stockbrokers, the potential risks that a stockbroker must disclose to the investor include the following:
- Market risk (a risk that the investment principal will decline in value if the price falls);
- Liquidity risk (a risk that the investment might not be easily sold or converted to cash); and
- Inflation risk (investments may not earn enough over time to keep pace with the increased cost of living).
Furthermore, stockbrokers must provide to investors additional disclosures of the risks of investing in the following types of speculative transactions:
- Margin trading(purchasing securities with funds borrowed from the brokerage firm;
- Day trading(buying and selling securities within very short periods of time;
- Penny stock investing(buying low priced stocks from companies that are not well established);
- Options trading(buying and selling contracts that give the purchaser the right to buy or sell a security at a fixed price which expire within a specified period.
If a stockbroker does not discuss the above risks with the investor, the stockbroker is violating his or her duty of fair dealing as outlined in the FINRA rules by making a misrepresentation. The stockbroker is also violating federal laws and state laws by eliminating a discussion of potential risk.
Contact a Stockbroker Fraud Attorney Today
If you have suffered losses because your stockbroker eliminated a discussion of potential risks, you may be entitled to recover those losses. The legal procedure that is used to recover your losses includes arbitration through the guidelines and procedures set forth by FINRA. You could also use the courts to recoup the money you lost. Your claim against your stockbroker and brokerage firm could be filed in federal court or state court. Only an experienced stockbroker fraud or investment fraud lawyer can determine if your best means of recovering your losses would be through arbitration or a lawsuit in federal or state court.
If you have suffered a financial loss because your stockbroker eliminated a discussion of potential risks, you should contact Erez Law today. The claim that you file against your stockbroker to recover your losses could become time-barred. There is a limited period of time in which the claim must be made to request arbitration, and a lawsuit against the stockbroker must be filed within a period imposed by the applicable laws. You cannot afford to wait. Call Erez Law today to receive a free consultation and case evaluation. Erez Law exclusively handles stockbroker fraud and investment fraud cases. Our team of experienced misleading stock information lawyers has a 99% success rate has recovered over $150 Million on behalf of victims of investment fraud. We are your best option to recover your losses. Call Erez Law today at (888) 840-1571 for your free consultation with one of our experienced attorneys.