What Happens if My Stockbroker Makes a Mistake?

If you’ve incurred losses due to a stockbroker’s error, you’re probably wondering what you can do to get your hard-earned money back. At Meyer Wilson, we understand how frustrating and financially stressful it can be when an incompetent broker mishandles your investment. That’s why we’re eager to help you get the justice and compensation you deserve.

Our investment fraud lawyers serving Ohio and the entire nation have over 75 years of combined experience handling broker negligence claims. We can draw on our extensive legal knowledge to file a strong complaint against your broker and get the remedies you’re owed. Let’s take a closer look at what happens when your stockbroker makes a mistake.

When Does a Stockbroker’s Mistake Warrant a Legal Complaint?

When you sign a contract with a stockbroker, they agree to uphold a certain standard of care when working with you and handling your investments. This standard of care is known as a fiduciary duty, and it requires the broker to always act in your best interest when managing your investment.

When a broker fails to meet the standard of care and the client suffers financial losses, the client has the right to take legal action. You may be eligible to pursue damage from your broker even if they were completely unaware of the mistake they made. 

Types of Mistakes for Which You Can Take Legal Action Against a Stockbroker 

There are many ways that a negligent investment broker can cause you to suffer financial losses. If you’re a victim of broker negligence, you’ll want to work with an attorney who has direct experience handling claims similar to yours. The right lawyer for your case will be able to take legal action for nearly any type of stockbroker mistake, including the following:

Overconcentration

When you invest with a stockbroker, they have a professional responsibility to diversify your investment, ensuring your money isn’t over-concentrated in one stock. Many advisors have a fiduciary duty to do so. Doing so helps minimize your risk of loss and increases your growth opportunity. However, some brokers fail to exercise caution and put all of your assets in one security.

If your money is over-concentrated in a stock that decreases in value, you could take on a significant loss. If your stock broker has made this mistake, you may have the right to hire a lawyer and pursue compensation for the loss you’ve incurred, depending on the circumstances.

Unsuitable Investment

When you start investing with a broker, you inform them about your investment goals and what types of stocks you want to put your money into. Part of your broker’s duty to act in your best interest, and oftentimes as a fiduciary,  is to honor your wishes and invest your money in the stocks you’re comfortable with. 

If you’ve conveyed to your broker that you’re only interested in investing in low-risk stocks, but they put your money into a volatile security, they’ve potentially made an unsuitable investment. If this broker mistake has caused you to lose money, you don’t have to suffer without compensation. A skilled attorney can help you seek damages from the liable party.

Failures of Best Execution

Since it costs money to trade stocks, brokers are required to execute trades for the best price they can find. Doing so involves checking all relevant markets and finding the National Best Bid and Offer (NBBO), which refers to the highest bid price and lowest offer price in a security among all the exchanges it’s listed on.

If your broker has failed to follow best execution practices, causing you to spend more money on a trade than you should have, you may be able to file a complaint against them. 

Proving a Stockbroker Should Be Held Liable for a Mistake

When you seek compensation for losses incurred due to a stockbroker’s mistake, you’ll have to prove that their negligence was the root cause of your loss. Doing so may be challenging, especially since you’ve probably never filed a claim before. Fortunately, a seasoned attorney can investigate your situation and seek out the evidence required to prove negligence.

In cases involving a breach of fiduciary duty, your lawyer will use the evidence they collect to satisfy the following elements of negligence:

• The broker owed a fiduciary duty to yo
• The broker failed to uphold the fiduciary duty
• The broker’s actions caused you to suffer financial losses

If your attorney finds evidence that satisfies the above-listed elements, they’ll likely be able to file a strong complaint on your behalf. Claims like these are filed with the Financial Industry Regulatory Authority (FINRA). Once your complaint is filed, your attorney will represent you during mediation or arbitration proceedings.

Compensation You Could Receive if Your Stockbroker Makes a Mistake

When your attorney helps you file a FINRA complaint against your broker, they’ll calculate how much compensation you should receive. Then, they’ll present evidence and compelling legal arguments as to why you deserve compensation during the arbitration process.

If the arbitrators overseeing your case rule in your favor, you could receive several different forms of compensation, including, but not limited to, the following:

• Trading losses
• Interest
• Dividends
• Money your investment would have made if it was handled properly
• Punitive damages, if appropriate

Schedule a Free Consultation With a Trusted Attorney Today

Recovering from losses caused by broker negligence can be incredibly difficult, especially if you’re unfamiliar with the FINRA arbitration process. The good news is that an attorney from Meyer Wilson can offer legal guidance and handle every aspect of your case.

Contact us today to schedule a free consultation with an experienced lawyer from our firm. If they agree to take on your case, they’ll build a strong complaint on your behalf and fight for your compensation during arbitration. You can count on us to act in your best interests and do everything we can to get your hard-earned money back.