| 1. |
Simple Negligence — unreasonable conduct is all you need. Every stockbroker has a duty to observe high standards of conduct, which means that your stockbroker must do what is right for you given your circumstances. Your broker owed you the obligation to make sure you understood the risks associated with your investments. If you didn’t appreciate that your investments could substantially decline, your financial advisor’s conduct was probably negligent. Do you think your broker was negligent? |
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| 2. |
Stockbrokers must make sure to place you only in suitable investments. Suitable investments are those which take into account your age, income, and risk tolerances. If you told your broker that you did not want to take much risk with your money or if you simply couldn’t afford to lose the money you have lost (for example, because you are retired or have limited assets) and you have lost a lot of your money, then your broker probably violated the suitability rule. Do you think your broker violated the suitability rule? |
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| 3. |
Margin abuses have increased dramatically in recent years. If your broker used margin in your account but did not explain to you the risks or downsides of margin, then you may have a claim against your broker and his or her firm. Do you think your broker didn’t tell you everything about margin? |
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| 4. |
Many stockbrokers justified their recommendations to clients by reference to the firm’s analyst
— both to get customers to buy particular stocks and to prevent customers from selling those stocks. We now know that many firms had incredible conflicts of interests and a financial motive to make those recommendations. Did your broker mention or provide you with analyst reports in order to convince you to buy or to prevent you from selling? |
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| 5. |
Sometimes brokers will mismark the confirmations for trades to say “unsolicited,” which means that the trade was your idea, not the broker’s. Brokers do this so that their supervisors will not look so closely at what is going on in your account. This is a very serious violation. Did your broker mark confirmations with the word “unsolicited” when those transactions were not your idea? |
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| 6. |
If you could wallpaper a room in your house with the confirmations you received, then your broker may have excessively traded or churned your account. Another red flag is if Schedule D on your tax return is more than one page. Do you think your account might have been excessively traded and were you relying 100% on your broker’s advice and not making
many of your own trades? |
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| 7. |
Unless you gave your broker
written discretion to trade in your account, every single transaction must be preceded by a conversation with you about the transaction. If this did not take place, then the trade is unauthorized and you may be entitled to undo the trade. Did your broker make trades in your account without first having a conversation with you? |
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| 8. |
Whenever
you open a brokerage account, a form is filled out with personal information about
you, such as your net worth, income, investment experience and investment objectives. You may not have ever seen your form, because firms are not required to send them to you, though many do. Brokers have an incentive to inflate the figures on the form, because doing so means that you can tolerate more risky investments. Brokers often make more money by selling you the riskier investments. If you don’t have your form, obtain a copy so that you can determine if the information on it is correct. If it’s not, that could spell big trouble.
Do you have your new account form and is there information
on it that is incorrect? |
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