SEC Finding Spotlight: January 2019
When we provide our financial information to a broker, we trust that he or she will act with our best interests in mind. Even securities laws assume this standard of care and require brokers to use the highest degree of fiduciary care when handling an investor’s accounts. Even with this clear requirement, many brokers and brokerage firms take advantage of clients for their own personal benefit with the belief that they will never be caught. Although there are federal rules in place that subject the brokers to punishment for wrongdoing, investors can also bring a civil claim against their broker and/or brokerage firm if they’ve suffered harm. Los Angeles securities attorney Steven A. Buchwalter proudly provides legal counsel and representation to investors who have been burned by their brokers. Whether you are just learning about potential wrongdoing or you are certain that your broker has engaged in misconduct, we are ready to help you assess your legal rights and options.FINRA Enforcement Action Targets Financial Elder Abuse
The Financial Industry Regulatory Authority (FINRA) is the agency responsible for creating rules governing broker conduct and engaging in enforcement actions where brokers fail to abide by these rules. A securities lawyer in Los Angeles can help you determine if your broker has potentially violated any of the agency’s rules.
In a recent action, FINRA determined that Robert Lee Basile, a broker in Chino, California, had been arrested for ‘theft by caretaker’ as part of an elder abuse investigation. Basile’s elderly mother had opened an account at Waddell & Reed, Inc., the brokerage firm where Basile was employed as a General Securities Representative. He served as the broker for the account. Between January 2015 and October 2017, he made withdrawals from the account and used more than $130,000 to pay for his own living expenses without obtaining the knowledge or consent of his mother.
This conduct violated a number of FINRA Rules, including 2150(a) which prohibits a broker from using a customer’s securities or funds in an improper manner. When Basile converted funds without his mother’s consent or awareness, he used the funds in an improper manner. As a result of this enforcement action, Basile was barred from associating with any FINRA member.Taking Legal Action After Broker Misconduct
If your broker engages in wrongful conduct, you can bring a negligence or fraud action against him or her to recover compensation for your financial losses, and a skilled Los Angeles attorney can help. You may also have a claim against a brokerage firm that employs the broker for failing to adequately supervise the broker. There are several FINRA rules that require brokerage firms to have a supervisory system in place to prevent fraud and misconduct.
In the action, you will need to show that the broker failed to act with the highest level of fiduciary care and skill when handling your accounts. This includes making material omissions or fraudulent statements in addition to making transactions for the broker’s own personal gain as opposed to your best financial interests. You must also show that the broker’s misconduct was the direct cause of your losses as opposed to other factors like fluctuations in the stock market.
If you are successful in establishing these elements, you will be entitled to receive the difference between the actual value of your account after the fraud and the estimated value that your account would be had the broker acted appropriately. In situations where the broker engaged in intentional misconduct or particularly egregious behavior, you may also be able to seek punitive damages, which are intended to punish a defendant and to discourage other defendants from engaging in similar conduct.Dedicated Securities Attorney Serving Los Angeles
Brokers have clear standards of conduct that they must follow, and they shouldn’t be allowed to get away with causing you serious financial harm and emotional stress. The securities exchange system can be incredibly confusing, even for avid investors, making it difficult to know whether your broker has engaged in misconduct. We offer a free consultation to discuss your situation and to help you learn more about your potential legal rights against your broker and his or her brokerage firm. We serve clients throughout the region, including in Hollywood, Beverly Hills, Malibu, and Pasadena, as well as in Chino and surrounding areas. To schedule your free consultation, call us at 818-501-8987 or contact us online.