SEC Finding Spotlight: July 2018
When an investor trusts a broker or brokerage firm with his or her finances, he or she is taking a calculated risk. Los Angeles securities lawyer Steve A. Buchwalter has seen just how badly things can turn out for investors when a broker or brokerage firm fails to comply with the many rules and regulations that cover the financial sector. In general, state and federal laws require professionals who work in the financial sector to treat their clients with transparency, integrity, and competence.
But if an investment adviser fails to act with the appropriate level of fiduciary care, he or she may face serious penalties and civil liability for the losses that the client suffered as a result. In the event that a broker willfully engaged in acts of fraud or deceit, the broker may face even harsher penalties. If you believe that you were a victim of broker negligence or fraud, contact us today to schedule a free consultation to learn more about how we can assist you with holding your broker responsible.Recent Enforcement Action Underscores the Application of FINRA Rules and Regulations
There are many different state and federal rules that govern broker conduct, but the primary set of rules is promulgated by FINRA, a private entity that regulates the brokerage industry. It is the successor agency to the National Association of Securities Dealers. FINRA carries out investigations and enforcement actions against brokers who are suspected of violating these critical regulations that are designed to protect investors.
In a recent enforcement action, broker Don Traywick of Crown Capital Securities in Orange carried out over 60 unsuitable short-term switches of Class A mutual fund shares in clients’ accounts. This is a direct violation of NASD Rule 2310 and FINRA Rule 2111, stating that a financial adviser must have a reasonable basis to believe that a suggested investment or transaction involving a security would be suitable for the customer. In other words, a broker needs to believe that the suggested action would be in line with the client’s goals and objectives. Traywick’s violations resulted in customers paying for unnecessary front-end sale loads (commissions) for each newly recommended purchase. He was found liable, required to pay a $5,000 fine, disgorge $10,000 in profits, and serve a three-month suspension from trading.
If a broker is found guilty by FINRA of violating these rules, you may be able to pursue compensation from the broker in a civil claim. Even without any FINRA findings, you can pursue your broker for rule violations that caused you harm. An experienced securities lawyer can help you review your potential claim and determine whether your broker owes you damages. In a civil action, you must prove that the broker failed to act according to the level of fiduciary care and candor required by California law. This includes making decisions that are in the investor’s best interests, disclosing any conflicts, and refraining from making decisions based on personal gain. If you can show that the broker did not act with this level of care, you are entitled to compensation to make you whole again. The amount is typically determined by the difference between the actual value of your accounts after the fiduciary breach and the estimated value of your accounts had the broker acted with appropriate care. Financial transactions and investments can be complicated, and there are many tactics that brokers may use to cover their tracks. This is why it is essential to seek experienced legal counsel to make sure that you receive the full amount of compensation that you are owed.Get Advice from a Knowledgeable Securities Fraud Attorney in Los Angeles
You spend a great deal of time contemplating your future and ensuring that your family will have the financial resources that it needs. Trusting a broker can be a difficult decision, particularly if you are making significant financial maneuvers and lack sophisticated knowledge. Attorney Steve A. Buchwalter has assisted people who have suffered harm from broker fraud or negligence throughout Southern California, including in Los Angeles, Manhattan Beach, Beverly Hills, Pasadena, Irvine, Newport Beach, Ventura, and Santa Barbara. We offer a free consultation to help you learn about your legal rights, so contact us now at 818-501-8987 or online to set up your appointment.