Exchange Traded Funds

Securities Law Attorney Serving Los Angeles and Surrounding Areas

As an investor, you likely place a significant amount of trust in your broker to give you honest and complete advice about your finances and how to achieve your financial goals. In some unfortunate cases, brokers abuse this relationship and render advice based on what will earn them the most money, regardless of how it may affect the client’s financial situation. Although there are numerous ways that brokers may harm their investors, one example involves exchange traded funds, or ETFs. Los Angeles securities law lawyer Steve A. Buchwalter has over two decades of experience assisting investors throughout Southern California, advising them on their options and helping them seek compensation after being burned by their brokers.

Understanding Exchange Traded Funds (ETFs) and Related Broker Misconduct

An ETF contains a portfolio of shares that follow various market indexes, like the S&P 500 or the Dow Jones. The portfolio could contain shares of pharmaceutical companies or energy companies, for example. In the event that one of these indexes does not perform well, the corresponding ETF will pattern after that trend. This means that significant losses may occur for individuals who invest in the ETF. Although sometimes the loss cannot be blamed on the broker, there are instances in which the broker may have advised the client to invest in an ETF based on their own financial gain. In some ways, ETFs are low-maintenance investments because they are passively managed. This means that the broker may invest the client’s funds and then let the investment track with the ETF. The downside of this aspect, however, is that the manager may not actively monitor and adjust the investment to achieve the optimum financial return for the investor. This becomes even more concerning because ETF managers have started creating more innovative types of ETFs, including leveraged ETFs. Leveraged ETFs are particularly problematic in that they have a unique set of expenses that further benefits the broker while harming the client. The leverage can greatly increase the investors risk making the investment problematic and not appropriate for most investors. A broker has a duty to ensure that the investor understands the mechanics of an investment and to regularly monitor the investment to ensure that the client’s goals are being furthered.

If your broker engaged in careless management of your finances or intentionally committed acts of fraud or misrepresentation, you likely will be entitled to compensation. Since brokers have an exceptionally high level of sophistication regarding financial matters, the law imposes a fiduciary duty on them when it comes to advising clients and helping them make financial decisions. This means that a broker must put a client’s goals and interests ahead of their own goal to make money. A negligent broker or brokerage firm may be required to compensate their client for the difference between the actual value of the account after the negligent conduct and the estimated value of the account had the broker acted with due care.

In the event that a broker engaged in willful, fraudulent, or misleading conduct, an investor may seek punitive damages. This type of award is designed to punish a defendant for egregious conduct while dissuading others from engaging in similar behavior.

Consult a Knowledgeable Los Angeles Lawyer to Pursue a Securities Law Claim

At the Law Office of Steve A. Buchwalter, we understand how devastating it may be when brokers fail to protect their clients’ assets and interests. This situation becomes even more challenging when it involves complex financial schemes or misleading information from your broker. Los Angeles securities law attorney Steve A. Buchwalter has represented investor clients throughout Los Angeles, Ventura, and Orange Counties, including in Beverly Hills, Pasadena, Newport Beach, Irvine, and Santa Barbara. We offer a free consultation to help you learn about the legal remedies available to you and how we may be able to assist you. Call us now at (818) 501-8987 or contact us online to set up an appointment with a skilled broker fraud attorney.