If you believe you have been defrauded by an employee of a broker-dealer in Texas, it’s crucial that you understand the FINRA arbitration process. Unlike many other legal cases, Texas FINRA cases go through a mandatory arbitration process, where the parties present their cases before a neutral arbitrator who makes a binding decision. Preparing for arbitration requires a unique set of skills compared to those required for a traditional court case.
For a free consultation with an experienced attorney who works on Texas FINRA arbitration cases, contact Erez Law, PLLC. During your initial consultation, we’ll discuss the details of your case, walk you through our FINRA investigation process, and answer any remaining questions you have about Texas FINRA claims.
How Erez Law, PLLC Can Help If You’re a Defrauded Investor
Erez Law, PLLC has recovered over $320 million for defrauded investors nationwide. Our firm is recognized nationally for its work protecting investors’ rights and has successfully resolved thousands of cases in arbitration and taken dozens to awards. Some of the ways we’ll use our more than 35 years of legal experience in your FINRA litigation case are:
- Filing a statement of claim
- Selecting arbitrators
- Gathering evidence
- Consulting experts
- Negotiating a settlement
- Preparing a case for arbitration if a fair settlement is unlikely
We encourage you to check out our client testimonials to learn more about what it’s like to work with our skilled team of attorneys who handle FINRA arbitration cases. One says:
“We couldn’t have asked for a better-prepared team and really appreciate your guidance, dedication, and countless hours you spent on our case. Regards and heartfelt thanks!” – Alon S.
The Most Common Types of Investment Fraud
Understanding the most common types of investment fraud can help you identify if you are a victim. Our firm regularly handles the following types of cases in arbitration:
Selling Away
Selling away involves a broker recommending investments not approved by their employer. Broker-dealers are supposed to rigorously scrutinize investments to make sure they are sound. Selling away opens investors up to investments that have not gone through the approval process.
Our firm secured a verdict of over $11.1 million for investors who lost money on a failed real estate development investment recommended by a Smith Barney broker in violation of FINRA’s rules.
Unsuitable Investments
An unsuitable investment does not match the investor’s preferred level of risk or help them achieve their investment goals. For example, a high-risk investment would be unsuitable for an investor who is risk-averse.
Our team previously recovered over $4 million for retired NFL players who were recommended unsuitable investments involving ETFs, inverse ETFs, and leveraged ETFs and told to concentrate their investments in the mining sector.
Unauthorized Trading
Unauthorized trading occurs when brokers make investment decisions without first obtaining consent from the owners of the investment accounts. Our firm helped a group of investors secure $5.7 million after they were defrauded due to unauthorized trading and misuse of margin by purchasing mortgage-backed securities.
Churning/Excessive Trading
When brokers make frequent trades on their customers’ accounts, it can drain them, but brokers sometimes do this for their own financial benefit to generate commissions. FINRA arbitration allows investors to pursue compensation for losses caused by this churning or excessive trading.
Failure to Diversify
When a broker only recommends investments that fall under the same industry or are within the same geographic region, it unnecessarily exposes their clients to risk. The best way to avoid having all of your investments negatively impacted by the same event is to diversify them across industries and geographic regions.
We helped a Puerto Rican family secure over $7.8 million after a broker recommended investments predominantly in Puerto Rico funds and bonds, which left their investment portfolio at risk.
Breach of Fiduciary Duty
A breach of fiduciary duty occurs when someone in a position of trust, such as a financial advisor, fails to act in their client’s best interests. They may do this by prioritizing their own interests or the interests of a third party.
Our firm recovered $6.2 million against a major brokerage for an ultra-high-net-worth investor, who alleged that their broker had engaged in negligence, breach of fiduciary duty, fraud, and negligent supervision.
Options Fraud
Options fraud can occur when brokers do any of the following:
- Misrepresent or omit material information when making recommendations
- Making unauthorized trades in options
- Making unsuitable investment recommendations
- Overconcentrating investors’ portfolios in risky option trades
Investment Misrepresentation
Misrepresentation occurs when a broker lies about investment opportunities or fails to provide their client with the information necessary for them to make an informed decision. This could involve leaving key investment details out of their reports or falsifying investment details to make the investments seem better than they really are.
We recovered $3.5 million for clients who lost money investing in a proprietary options strategy with a major brokerage firm. The broker misrepresented the investments and failed to make adequate disclosures.
Structured Notes Fraud
FINRA has established additional rules for broker-dealers concerning structured notes due to the potential for investors to lose their principal in these investments. Broker-dealers violate relevant rules when they fail to train their financial advisors on these products, fail to conduct due diligence to determine if the recommendation is suitable and in their customers’ best interests, or misrepresent these investments.
Signs You May Have Been Defrauded
If you recognize any of the following signs in your dealings with a broker-dealer, it may indicate that you are the victim of investment fraud:
- There are unauthorized transactions in your accounts.
- Your broker failed to disclose investment details.
- Your broker misrepresented investments.
- Your investments are concentrated in a single industry or geographic area.
- You experienced significant investment losses in a short period.
- You are having trouble contacting your broker.
An experienced investment fraud lawyer can help you determine whether fraud occurred and take the next steps toward seeking the financial recovery you deserve.
The Role of FINRA Arbitration in Recovering Investment Losses
The first step in seeking recovery for investment losses suffered due to fraud is to attempt a settlement. However, negotiations do not always result in the broker-dealer offering a fair settlement that covers their investor’s losses. When this is the case, FINRA arbitration is the next step.
Rather than presenting your case before a judge and jury at trial, arbitration involves a neutral arbitrator who decides the case’s outcome. A key benefit of arbitration is that it is often less time-consuming and costly than preparing for and going through a trial. You also get to select an arbitrator who understands the complexity of these cases. Like a judge’s decision, the arbitrator’s decision is legally binding and can result in a significant FINRA arbitration award for the defrauded investor. In some ways, it is even more binding than a judge’s decision because there are limited grounds to appeal an arbitration decision.
Call Us Today for a Free Case Review
Are you concerned you may have been the victim of investment fraud in Texas? Contact Erez Law, PLLC for a free consultation with our experienced lawyers who work on FINRA arbitration cases. We’ll review the details of your case, explain your options for seeking financial recovery, and walk you through how Texas FINRA arbitration cases work.