Featured Investigation: December 2020

One of the main reasons that investors turn to a broker or brokerage firm is to receive advice and reassurance that their financial goals and health are being achieved to the greatest level possible. Many investors enjoy a solid relationship with their broker and find the relationship to be a rewarding experience. In other situations, however, an investor may realize that their broker has been up to no good. Whether through careless negligence or intentional fraud, brokers who make mistakes can be held responsible for your financial losses and injuries. Los Angeles securities lawyer Steve A. Buchwalter is a former stockbroker, which gives him a unique perspective on the industry and helps him represent the rights of investors who have been burned by their brokers. Contact his office today to start learning more about whether you are owed compensation.

The Financial Industry Regulatory Authority (FINRA) is responsible for overseeing broker conduct and making sure that brokers treat their clients fairly. FINRA passes and enforces a number of laws that require brokers to be honest at all times, to represent the best interests of their investor clients, and to follow certain best practices like obtaining written consent for various transactions.

In a recent enforcement action, FINRA concluded that broker Cynthia Diane Cowden with NPB Financial Group suggested a series of unsuitable high risk, speculative investments to three elderly customers. According to FINRA, the three investors had little investment experience, as well as a moderate risk tolerance. Two of the investors, a married couple, informed the broker that they wanted to achieve a stable, balanced portfolio along with income and liquidity because their investments were going to provide them with supplemental income. Unfortunately, Cowden suggested a number of purchases that were illiquid and high-risk. The investments did not comport with the investors’ goals.

The third investor, who was still in the workforce, had low to moderate risk tolerance with a goal of slow growth and a reasonable rate of return, while also wanting liquidity. Cowden suggested that the investor purchase $250,000 of a speculative, high-risk, illiquid closed-ended mutual fund. This was an unsuitable transaction that represented over 50% of the investor’s net worth.

FINRA also determined that Cowden falsely testified about the customers’ assets and income. Her conduct in relation to these accounts was a direct violation of FINRA Rules 2011 and 2010, which require brokers to have a reasonable basis for making investment strategy recommendations taking into consideration the client’s financial position and objectives. As a result of her violations, Cowden is prohibited from engaging in future securities related transactions.

In addition to facing retribution from FINRA, a broker or brokerage firm that has engaged in negligent or reckless conduct can be liable to the affected investors in a civil suit. In the lawsuit filed by your attorney, the investor-plaintiff will need to show that the broker failed to act with the high level of fiduciary care and skill that all brokers and brokerage firms have. This includes having a high degree of candor, following a client’s wishes, and complying with FINRA regulations. If you are successful in showing that the broker or brokerage firm was negligent or intentionally fraudulent, then you are entitled to compensation. The amount you are awarded varies depending on certain factors, but generally consists of the difference between the value of your accounts after the improper conduct and what they would have likely contained had the broker advised you properly.

Attorney Buchwalter knows how painful and devastating it can be to realize that you have been burned by your broker. He and his team will fight diligently to make sure that you receive the full amount of compensation that you deserve following this tragic incident. With a seasoned background in securities rules and regulations, he can pinpoint how your broker failed you while identifying any FINRA violations. He proudly represents investors throughout Malibu, Beverly Hills, Pasadena, Manhattan Beach, Los Angeles, and other areas. Call now at (818) 501-8987 or contact him online to get started.