Managed Futures Funds and Commodity Trading Advisors

Investors place a great deal of trust and faith in brokers to help them make beneficial decisions for their financial goals. Unfortunately, many brokers and brokerage firms take advantage of this situation and some investors’ lack of experience, and they may make decisions that benefit the broker rather than the investor. In other situations, some brokers simply manage the investors’ accounts in a negligent manner, failing to disclose critical terms or failing to take key actions at appropriate times. Recently, many investors have been burned by managed futures funds. Los Angeles securities fraud lawyer Steve A. Buchwalter and his staff have helped investors throughout Southern California seek compensation from a broker or brokerage firm after suffering financial losses related to a managed futures fund.

A managed futures fund is an investment vehicle that trades futures contracts or derivatives. This field is often difficult to understand, even for investors with substantial experience. Originally, managed futures funds were encouraged by brokers as a potential method to help investors diversify their holdings and to earn profits during a period when standard methods of investment were not performing well. Commodities Trader Advisors (CTAs) are the professionals who manage investments in futures funds. CTAs are required to undergo an FBI background check and register with the Commodity Futures Trading Commission before they can handle these transactions.

One of the biggest issues that investors may encounter with a managed futures fund is the extremely high commissions and fees that CTAs charge. Since CTAs earn such exorbitant fees from these investments, they often encourage investors to keep their money in the managed futures funds, even if doing so is not in line with an investor’s financial goals or best interest. Additionally, CTAs are not required by the Securities and Exchange Commission to inform investors of their fees. This creates opportunities for fraudulent brokers to misrepresent their fees or to mislead investors entirely when it comes to the amount of money that the broker will make on a certain investment.

Managed futures funds are also extremely risky. Many investors are not told of the enhanced risk in such funds.

If you have suffered financial losses as a result of your broker’s negligence or intentional wrongdoing, you may bring a claim against them to seek compensation. It is often also appropriate to include the broker’s firm, since California holds employers responsible for any negligent acts that their employees carry out in the course and scope of their job duties. Since brokers have a higher level of knowledge and experience with finances compared to most investors, California holds them to a high standard of care as fiduciaries. To prove that the broker acted negligently, the plaintiff must show that they failed to use the same reasonable care and skill that a prudent broker would have used in a similar situation. The investor will be entitled to receive the difference between the actual value of their accounts and the estimated value of their accounts had the broker not engaged in the negligent or reckless conduct. If the broker engaged in intentional misconduct, such as fraud, a plaintiff may be able to recover additional compensation in the form of punitive damages. Designed to deter other brokers from similar conduct and to punish the reckless defendant, punitive damages may be awarded in addition to compensatory damages.

If you have suffered needless financial harm as a result of a managed futures fund or a commodity trading advisor’s actions, you may be entitled to compensation. Los Angeles securities fraud attorney Steve A. Buchwalter has assisted many victims of investment fraud with investigating their claim, gathering evidence, and holding wrongdoers accountable. Our clients have included investors in Beverly Hills, Pasadena, Newport Beach, Irvine, and Santa Barbara, as well as other cities in Los Angeles, Orange, and Ventura Counties. To set up a free consultation with a broker negligence attorney, call us now at 1-(818) 501-8987 or contact us online.