Failure to Protect Profits
When it comes to investing, there is one overarching goal on most investors’ minds: protecting and/or increasing wealth. Whether you want to plan for your future or are looking to increase your assets in the short term, brokers have a duty to not only carry out your financial goals but protect your profits as well. Unfortunately, many brokers fail to use sufficient care when overseeing their clients’ accounts. Even worse, some brokers take advantage of investors’ lack of detailed knowledge about investment options or take advantage of the trust accorded to them to make decisions for their own financial gain. If your account appreciates significantly, the broker has a duty to implement a plan, or at least recommend a plan, to the investor that is designed to protect those profits. At the Law Offices of Steve A. Buchwalter, our Los Angeles securities fraud attorney is available to help you hold your broker accountable for negligence in a failure to protect profits.Bring a Negligence Claim Against a Careless Investment Professional
If your broker fails to protect your profits, and you suffer financial losses as a result, you can bring a negligence claim to recover your losses. There are several steps in a negligence action that you must prove in order to be entitled to damages. First, you must prove that your broker failed to maintain your account according to their duty of care. When it comes to brokerage firms and investing, brokers have a duty to watch an investor’s accounts and to make a recommendation about any sudden changes, fluctuations, or upcoming issues that may affect their accounts. A broker also has a duty to adhere to the investor’s financial goals and wishes, such as knowing whether the client is open to risk or risk-averse.
If a broker fails to monitor an investor’s accounts and fails to make recommendations on how to protect a sudden increase in profits, the broker has breached their duty of care. California recognizes a doctrine called vicarious liability, which states that employers can be held liable for the negligent acts that their employees commit during the course and scope of employment. This means that an investor who has lost income as a result of a broker’s failure to protect profits can also bring a negligence claim to recover compensation against the brokerage firm that employs the broker to recover compensation. A securities lawyer can help you determine whether you can assert this type of claim.Assert Your Right to Damages
After establishing that the broker or brokerage firm failed to handle your account with the appropriate level of care and skill, you must also show that this failure was the cause of the financial losses that you suffered. In other words, you must establish that you likely would not have incurred financial losses had your broker acted according to the appropriate standard of care. The final stage of a securities negligence action involves proving the amount of damages that you should be awarded in the action.
There are a number of approaches to calculating your damages. The first is called the “well managed account” principle. This holds that an investor is entitled to the difference between the actual value of their account after the negligent management, and the estimated value of the account had the broker used the appropriate level of care. If the broker engaged in any misrepresentation or fraud in failing to protect your assets, you may also be entitled to seek punitive damages. This is a separate category of damages that is intended to punish brokers for engaging in malicious and wanton conduct, while discouraging other brokers from engaging in similar behaviors.Consult a Knowledgeable Los Angeles Lawyer to Discuss Your Next Steps
Realizing that your broker has made an egregious mistake or used your account for their own financial gain is a stressful experience. You deserve to have justice and to have your finances restored. Attorney Steve A. Buchwalter has counseled hundreds of Southern California residents on their rights following an incident of broker fraud or negligence. He realizes how challenging this situation can be for you, especially if you do not have a sophisticated understanding of how investments work. Serving clients throughout Los Angeles, Orange, Santa Barbara, and Ventura Counties, including in Beverly Hills, Pasadena, Newport Beach, and Santa Barbara, we offer a free consultation to discuss your situation. Call us now at 818-501-8987 or contact us online to set up your appointment.