Your financial advisor or broker has a duty to act in your best financial interests when handling your money. Failure to do so could be considered negligence or another form of investment misconduct. Financial negligence occurs when a financial advisor or broker fails to demonstrate a reasonable standard of care regarding the handling of an investor’s money.
At Meyer Wilson, we have a long history of helping victims of financial advisor and investment broker negligence recover compensation from those liable for their damages. Our experienced team of financial advisor negligence lawyers will use every resource available to secure a favorable outcome on your behalf. Contact us today to schedule a free case review.
The Difference Between Financial Advisor/Broker Negligence and Fraud
When you lose money that you invested as a result of investment misconduct, it is important to understand whether your losses were caused by fraud or negligence. Investment fraud involves deliberate actions being taken by the party handling your investment to deceive you for their personal financial gain.
Meanwhile, with negligence, your financial advisor or broker simply fails to perform due diligence to ensure they are handling your money in a reasonable manner or acts in a manner that is below the standard of care in the industry. Negligence can take many forms. An experienced attorney can help you determine whether you were the victim of negligence and how you suffered losses as a result.
Your lawyer will consult with experts to determine the extent of your financial losses and how your investment should have been treated had your financial advisor or brokerage firm properly handled your account.
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Types of Financial Advisor/Broker Negligence
Broker negligence can affect your financial investment in a variety of ways. Some of the most common types of negligence include:
- Failing to follow state or federal laws
- Making guarantees about an investment
- Failing to properly supervise accounts
- Making unsuitable financial recommendations
- Failing to correctly diversify an account
- Churning and reverse churning
Failing to Follow State or Federal Laws
In addition to federal laws and regulations set forth by the Securities and Exchange Commission (SEC) concerning the financial industry and what is acceptable behavior for financial advisors and institutions, each state has financial industry laws of its own.
Your financial advisor or investment broker should be well aware of all the laws and regulations that apply to ensure investors’ financial security. If your advisor fails to follow these laws and you lose money as a result, they may be guilty of negligence.
Making Guarantees About an Investment
When it comes to the stock market, there is no such thing as a sure thing. If your financial advisor makes any guarantees about a specific stock or assent, they are neglecting to give you all the information you need to make an informed decision.
If you followed guarantees made by your financial advisor and suffered financial losses, you may be able to sue your financial advisor.
Failing to Properly Supervise Your Account
When a financial advisor or broker fails to properly supervise the accounts they are handling, financial losses for their investors are common. The party handling your money should be closely monitoring the market and your investments to ensure that your money is invested as best as possible.
If your financial advisor neglects to regularly monitor your account, and you suffer losses, they are susceptible to a negligence claim.
Making Unsuitable Financial Recommendations
Your financial advisor or broker should be well aware of your financial situation and ensure that any investment recommendations they make are aligned with your investment strategy. If they invest your money more conservatively or aggressively than your age and risk profile dictate, you have the right to pursue legal compensation for any resulting losses.
Failing to Correctly Diversify an Account
It is critical that your financial advisor or broker properly diversifies your account to ensure your eggs aren’t all in one basket. The diversification of your account should also be in line with your risk tolerance to maximize the growth of your investment within acceptable risk parameters.
An improperly diversified portfolio can result in massive losses or simply fail to grow your money at the rate it should. An experienced lawyer can help you file a claim and give you the best chance of securing a favorable case result.
Churning and Reverse Churning
Churning and reverse churning are common problems faced by investors whose financial advisors and brokers neglect to handle their accounts properly.
If your account is commission-based, you could be at risk for churning. Churning occurs when your financial advisor makes excessive trades with your money to increase their commissions without regard for whether the transactions are in your best interest.
If you have a flat-fee account, reverse churning can be an issue. With reverse churning, your broker invests your money and then fails to touch it at all or makes minimal moves with your investment and simply collects their annual fee.
Get Help From an Experienced Financial Advisor/Broker Negligence Lawyer Today
If you believe your investment is not being handled properly, you should reach out to an experienced lawyer as soon as possible. At Meyer Wilson, our team of financial advisor and broker negligence lawyers has a long history of helping clients recover the money they deserve.
Over the past 25 years, we have helped secure $350+ million on behalf of those we represent. Contact us today by phone or through our website to set up a free case evaluation with a member of our legal team.
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