Featured Investigation: September 2020

We trust our financial advisors to carry out our best wishes and to make decisions on our behalf. In some situations, a broker may act carelessly and make decisions that hurt our financial interests instead of improving them. In other more tragic situations, a broker may exploit his or her relationship with a client for the sake of personal gain. In either situation, the victim of this careless or reckless conduct may be entitled to compensation for his or her financial losses. Los Angeles securities lawyer Steve A. Buchwalter is a former stock broker who now represents investors who have been burned by their broker. He is available to assist you with evaluating your potential claim.

The Financial Industry Regulation Authority, or FINRA, is responsible for creating rules to ensure that brokers act appropriately. It also enforces these rules against brokers who violate them. These rules cover a wide variety of things including a high degree of candor and obtaining written authorization in a number of instances. Brokers are also required to report several things to their brokerage firms. One of the most important rules is FINRA Rule 2010. This rule states that brokers observe high levels of commercial honor and just and equitable principles of trade.

In a recent enforcement proceeding, FINRA concluded that a broker located in Altadena named Dennis A. Mehringer, Jr. with Western International Securities, committed a number of violations. FINRA was made aware of the situation after a customer filed an arbitration claim against the broker alleging that the broker engaged in excessive trading and trading without authorization.

FINRA concluded that he engaged in the unsuitable short-term trading of mutual funds in one of his customer’s accounts while also making decisions about the account without receiving written authorization from the client or firm approval. FINRA also determined that the broker gave his firm false information about a charitable trust. Finally, FINRA determined that the broker falsely told his firm that he had not settled customer complaints against him.

As a result of these violations, FINRA ordered a number of penalties and fines including the disgorgement of over $108,000 among other things.

If you think that you were burned by your broker, it can be difficult to know where to start. Brokers are held to a high standard of care when it comes to managing their clients’ accounts. This means being candid and forthcoming as well as making decisions that are in the client’s best interests instead of decisions that would generate more profit for the broker or brokerage firm. This common law rule is similar to FINRA Rule 2010, which applies broadly to all broker conduct.

In general, California law entitles the victim of broker negligence or fraud to compensation for the financial damage they incur as a direct and foreseeable result of the broker’s conduct. This means that you must be able to show that the financial losses that you suffered would not have happened but for the broker’s negligence or fraud.

Next, you must provide evidence to support the amount of damages that you are claiming in the lawsuit. This usually consists of showing the actual value of your account versus the estimated value that your account would contain had the broker acted appropriately. A seasoned lawyer can help you ensure that you seek the maximum amount of compensation available to you.

Attorney Buchwalter has been serving investors throughout Southern California for many years including Pasadena, Malibu, Beverly Hills, and Los Angeles. He understands how overwhelming this situation can be for victims and how confusing the legal process can be. To set up a free consultation with a knowledgeable securities lawyer, contact his office today at (818) 501-8987 or online to get started.