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Broker Negligence Leading to Investment Loss

Some persons - even some lawyers - are of the mistaken belief that investors must demonstrate that a broker or firm committed securities fraud in order to seek recovery. This mistake may stem from the narrow requirements placed on class action securities claims, which must now be filed by demonstrating fraud under Federal securities laws in Federal Court.

Sometimes your financial advisor is well meaning and a decent person but was just poorly trained, mis-informed or just plain dropped the ball unintentionally. Advisors rely on what their firms tell them. We had a large string of cases where the brokerage firm told the broker that a particular product was safe and conservative in nature. Arguably the broker could have done his own research, but in this string of cases we handled, he took his employer at face value. The products in question were not principle protected and the clients lost significant sums. All the clients really liked the broker personally, but negligence in recommendations can lead to devastating loses.

On a separate occasion a financial advisor gave faulty advice on the liquidity of a product that traded via an auction. He believed, though the firm knew better, that it was fully liquid and made the recommendation to our client to invest seven figure sums. The market for the product froze and this business entity we ended up representing was severely compromised. Besides losing money, this company also lost its business. The advisor in question was completely negligent in his due diligence.

Skilled Counsel in Broker Negligence

We all owe each other a basic duty as human beings to not behave in a way which may cause harm to another.Such a duty, obviously, applies to financial advisors and their employers. Losses may be caused by more than negligent behavior.

Many persons fail to file claims against a financial advisor or firm for broker negligence because they do not what to accuse that person or firm of fraud or to otherwise reflect on their licenses or character. Yet, few of us would fail to seek recovery of our losses if our neighbor backed into our automobile or caused our house to burn.

Generally, such claims against advisors and their firms are determined in private arbitration and lawsuits are rarely filed. This process involves less participation by the investor than in court cases and the matter is usually resolved in less than a year.

Anyone can make a mistake, but we are all responsible for our actions (or inactions). If fiduciary negligence by a broker or firm caused losses to an investor the broker or firm should reimburse the investor for those losses. Not all losses are caused by negligence or other wrongdoing, but why not seek (free) legal advice if you have sustained significant losses.

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