There are many rules that were established by the Financial Industry Regulatory Authority (FINRA) along with its predecessor, the National Association of Securities Dealers (NASD), that regulate how those who trade in securities conduct their business. One of those rules is FINRA Rule 3110 – Supervision.
Rule 3110 sets the ground rules that must be followed by brokerage firms when it comes to managing their employees. At Meyer Wilson, we have helped countless investment fraud victims recover compensation from the firms where they invested their money. Contact us to schedule a free consultation with one of our Columbus investment fraud lawyers today.
Requirements of FINRA Rule 3110
Under FINRA Rule 3110, investment firms must establish and maintain a system that allows them to properly supervise the activities of their employees and anyone making decisions while working in any capacity for the firm. This system should help ensure that everyone working for the firm is in compliance with all applicable laws, regulations, and rules regarding securities.
The system the firm sets up must include written procedures designating who in the firm has supervisory responsibilities. Additionally, there must be an annual discussion about relevant compliance matters that apply to the firm and its employees. Rule 3110 states that beyond designated supervisors, the ultimate responsibility for ensuring compliance lies with the firm.
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Holding Brokerage Firms Responsible for Investment Fraud
FINRA Rule 3110 helps ensure that brokers act responsibly in regard to the money invested by clients by ensuring that any illegal conduct committed by an individual broker can result in legal and financial consequences for the firm that employs them. With these potential consequences, brokerage firms are more likely to ensure that their brokers are compliant with all regulations.
Making brokerage firms responsible for the actions of their brokers also gives investors improved chances of recovering the compensation they need and deserve. Investors who have been defrauded can pursue damages from both their personal financial advisor and the brokerage firm.
How an Experienced Investment Fraud Lawyer Can Help
If you were victimized by investment fraud, securing the services of an experienced attorney will significantly improve your chances of successfully recovering the money you need and deserve. When you hire a lawyer, they will work diligently to build a strong case on your behalf.
Your attorney will investigate the loss of your investment to prove that your broker committed fraud. After filing a lawsuit against the broker and the brokerage firm due to violating FINRA Rule 3110, your attorney will begin preparing your case for arbitration. The majority of cases involving FINRA violations are resolved through arbitration, with few cases ever going to court.
While preparing your case, your attorney will also be in ongoing negotiations with opposing counsel, attempting to reach a favorable settlement deal. If an agreement can not be reached, your lawyer will argue your case before the FINRA arbitration panel.
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Brokerage Firms Are Held to a High Standard of Responsibility
The largest brokerage firms handle the life savings of millions of clients. For each one of these clients, poor investment decisions have the potential to leave them without the nest egg they have been building to support their families and their retirement. With this much power over every investor represented by the firm, there is extreme potential for devastating consequences.
Because of the power held by these firms, they are expected to conduct themselves appropriately and work to ensure the financial health of those who invest with them. A failure to supervise the brokers they employ means that these firms have not lived up to their fiduciary experience.
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How to Identify Investment Fraud
If you have lost money after investing with a brokerage firm, you may be wondering about your options for recovering compensation. However, not all losses are recoverable. Natural fluctuations in the market or unforeseeable events do not qualify you to recover damages.
In order to pursue compensation from your broker and brokerage firm, you must prove that your losses were the result of broker misconduct or fraud.
Determining the true cause of losses in your investment can be challenging. Fortunately, the United States Securities and Exchange Commission (SEC) has created a checklist of investment fraud red flags you can review. If any of these red flags are familiar to your situation, contact an experienced investment fraud attorney to learn more about your legal options.
Reach Out to an Investment Fraud Attorney from Our Firm Today
If the brokerage firm where you invested your money failed to supervise your broker and the result was a loss in your investment, you have legal options for pursuing compensation. An experienced investment fraud lawyer can help build your case and give you the best possible chance of recovering compensation.
Contact us today by phone or through our website to schedule your free initial consultation with a member of our team. We’ll review your case, discuss your legal options, and answer any questions you may have.
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