Featured Investigation: November 2020

There are so many different types of securities available to investors today. Many of us turn to a broker to help us understand more about which opportunities might be right for us. Although some investments may seem relatively low risk, there is always a chance that your broker could either engage in carelessness or intentional fraud when handling your accounts. It can be difficult to think about this, especially if you have worked with your broker or brokerage firm for a substantial period of time. Los Angeles securities lawyer Steve A. Buchwalter provides investors who have been burned by their brokers with legal assistance when they need it most. If you think that your broker dropped the ball while handling your accounts or tried to defraud you intentionally, call us today to learn more about your potential claim.

Recently, the Financial Industry Regulatory Authority, FINRA, engaged in an enforcement action against a broker from Culver City, California, who was employed with JP Morgan. The broker, Lauren L. Wing, was found to have made two trades in a customer account during January 2019 without first obtaining the client’s written authorization. She purchased two Certificates of Deposit (CD) totaling $314,000. A CD is an investment product that banks and credit loans offer. It provides an interest rate premium if the customer agrees to leave a specified lump sum amount untouched in the account for a pre-agreed upon period of time. When the customer discovered this, the customer complained in an email and Wing sent the message to her managers. The firm decided to reverse the unauthorized trades and reimburse the client the money that was lost as a result of the trade. Wing was also terminated from JP Morgan.

This is a direct violation of FINRA Rule 2010. This rule states that all brokerage and securities professionals must adhere to a high standard of commercial honor, including just and equitable principles of trade. Making a trade in a client’s account without prior authorization does not comport with this standard. In this situation, even a relatively common investment like a Certificate of Deposit was the basis for broker negligence.

If your broker engaged in negligence or fraud, you may have legal recourse against the broker and any brokerage firm that employed the broker at the time the situation happened. This is a type of negligence claim, which means you must show that the broker failed to use adequate care and skill in handling your accounts and complying with FINRA regulations. Because brokers are entrusted with large sums of money and individual’s financial well-being, the law imposes a very high fiduciary duty of care on them. They must act with candor and honesty, make various communications with clients about investment decisions, and sometimes document these communications in writing.

Once you have shown that your broker and/or brokerage firm did not act according to its fiduciary duty of care, you must also show that there is a direct connection between this failure and the financial damages that you suffered. If the broker and/or brokerage firm can show that some other factor was the substantial cause of your losses, then they may not be required to pay you any financial compensation. This is where a seasoned lawyer can help you make sure that you put together the strongest case possible. If you are able to establish causation, then you can recover the difference between the amount in your account after the improper conduct and the estimated value that your accounts would contain had the broker and/or brokerage firm acted appropriately.

Attorney Buchwalter has substantial experience in the securities industry. As a former broker, he knows the industry inside and out. Working with investors throughout Los Angeles, Beverly Hills, Malibu, and Pasadena, he offers a free consultation so that you can learn more about your rights and whether you should pursue legal action against the people who burned you. Call today at (818) 501-8987 or contact his office online.