SEC Finding Spotlight: August 2019

Securities Fraud Lawyer Serving Los Angeles and Surrounding Areas

For some clients, brokers may be friends or even family. If you did not know your broker before you started a professional relationship, meanwhile, you may have developed some type of friendship or acquaintance as you worked together to achieve your financial goals. In many cases, this relationship is healthy, enjoyable, and an added benefit to working with a financial professional. In other situations, the broker may try to take advantage of you and exploit your relationship for his or her own financial gain. Los Angeles securities fraud lawyer Steve A. Buchwalter has been bringing cases on behalf of investors who were burned by their brokers for many years. He has brought over 400 cases to resolution. If your broker took advantage of you in some way and abused your relationship, resulting in financial harm, contact us today.

Brokers May Not Borrow Money from Their Clients

A recent FINRA enforcement action highlights a primary way in which many brokers try to take advantage of clients. FINRA is the regulatory body that is tasked with overseeing the securities industry, creating rules about transactions and broker conduct and enforcing these rules through investigations. The broker in question, Patrick Neal Foley, worked for Merrill Lynch in Ontario, California and violated FINRA regulations by accepting a loan from a client, who was an elderly individual. Mr. Foley also failed to appear to provide testimony to FINRA in the investigation. The firm ultimately terminated the broker for his misconduct.

Elderly members of society are unfortunately targeted frequently by brokers who think that their age will make them less eager to discuss what the broker is doing or to question whether the broker is doing something illegal. Elderly investors often have substantial assets and wealth through lifetime retirement or investment accounts as well, leading some brokers to see them as targets for their personal gain.

The broker may assure the client that the loan will be quickly and easily repaid, but this is not always the case. And regardless of whether the broker does make good on this promise, FINRA forbids brokers from accepting any personal loans from clients. This can create a conflict of interest between the broker and the client because the client may feel obligated to make the loan for fear that the broker will not manage his or her accounts well if he or she refuses to provide financial assistance. Meanwhile, if the broker fails to repay the loan, the investor may no longer have confidence in the broker’s ability to manage his or her assets in a responsible and productive manner.

If your broker engaged in negligent or wrongful conduct, you may be entitled to compensation. Brokers have a fiduciary duty to their clients to act with complete candor and fairness, which includes being transparent and preserving the integrity of the relationship. If your attorney is successful in showing that your broker acted negligently or fraudulently, you may be eligible to receive the difference between the current value of your accounts and the estimated value that your accounts would have contained had the broker not acted negligently or fraudulently. This legal action is separate and apart from any enforcement action that the broker may be facing through FINRA or any criminal charges brought against the broker.

Schedule a Free Consultation with a Tenacious Broker Fraud Lawyer in Los Angeles

If you think that your broker has violated your trust or acted in an illegal manner when dealing with your investment accounts, you may be entitled to compensation. This can be a very complex situation, especially if sophisticated securities instruments and transactions are involved. Serving clients throughout the Los Angeles region, including in Pasadena, Beverly Hills, Santa Barbara, and Newport Beach, Attorney Steve A. Buchwalter has assisted investors with a wide variety of legal matters involving broker fraud and negligence. Call us as soon as possible at (800) 678-8185 or contact us online for a free consultation.