When Failure To Supervise Enables Broker Fraud
Texas Retirees Whose Financial Advisor Stole Their Savings File FINRA Arbitration Claim Against Planmember Securities
As their customer, your broker-dealer has a fiduciary duty to properly supervise your accounts and your financial advisor’s activities when working with you. Unfortunately, failure to supervise these types of financial firms happens way too often. This lack of oversight makes it easy for stockbroker mistakes and wrongful misconduct to happen, which can lead to serious investor losses. That is why it is important to know when failure to supervise requires a broker fraud attorney to recover losses.
Most recently, our expert broker fraud attorneys filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against brokerage firm Planmember Securities Corporation. Our clients, two Texas retirees, contend that they were the victim of misappropriation after a Planmember Securities broker allegedly stole their money. That individual is now deceased.
In their FINRA lawsuit, the claimants contend that this former financial advisor allegedly embezzled their money and that Planmember was grossly negligent with its purported lax supervision. Now, these Texas investors are seeking up to six figures in damages.
Unfortunately, older investors are a favorite target of bad brokers seeking to steal their clients’ money. A broker-dealer’s failure to properly supervise its financial advisors makes it easier for such crimes to happen. Shepherd Smith Edwards and Kantas (investorlawyers.com) represent senior investors throughout the US who have been the victim of elder financial abuse in pursuing damages from their brokerage firms.
What Is Failure To Supervise and How Does It Lead To Investor Losses?
It is important that your brokerage firm monitor the recommendations and activities of its brokers to not only ensure that they are in compliance with FINRA regulations and securities laws, but also that trades made in each customer’s account are suitable given the latter’s investing profile, age, risk tolerance level, financial goals, and other criteria.
Proper supervision by a broker-dealer allows it to identify red flags of possible broker fraud or negligence and, ideally, stop any potential wrongdoing or mistakes before it can cause a client financial harm. Unfortunately, failure to supervise happens way too often and it is this poor oversight that may enable bad brokers to get away with misappropriating funds from their clients. Rogue financial advisors have even been known to conduct Ponzi scams and other fraudulent schemes because their brokerage firm wasn’t paying attention.
Planmember Securities operates offices of supervisory jurisdiction (OSJs) and many of their brokers work out of their own offices without any onsite supervision. However, this did not mean that Planmember was allowed to shirk its obligation to properly oversee his activities.
But it isn’t just theft by a rogue broker that can happen with lax supervision. Overconcentration, misrepresentations and omissions, broker fraud, selling away, and registration violations may also occur. All of these may lead to significant investor losses.
What Happens When Older Retirees Become The Victim of Broker Fraud?
Stockbroker fraud is obviously harmful to every kind of investor. Senior investors, unfortunately, are especially vulnerable and will often struggle the most in recovering financially after becoming the victim of such a crime. Many retirees may no longer be working and had hoped that their savings that they’d labored a lifetime to accrue, coupled with the help of a good financial advisor, would allow them to live comfortably (and deal with any emergencies or medical care) for the rest of their lives. Theft by a broker can not only destroy their plans but also cause huge emotional and mental turmoil.
This is why it is so important that if you are the victim of investment fraud, you speak with a knowledgeable Broker Fraud Attorney who knows how to pursue damages from the brokerage firm whose lax supervision enabled your losses.
Throughout the US, contact Shepherd Smith Edwards and Kantas at (800) 259-9010 today.
You can also speak with a Texas Broker Fraud Attorney if you suspect elder financial abuse:
Houston: (713) 227-2400
Dallas: (214) 613-5306