SEC Finding Spotlight: July 2019
When we turn to a broker or brokerage firm to manage financial assets, we are often hoping that they will take most of the work and stress out of pursuing our financial goals and making smart investments. Unfortunately, many brokers abuse their clients’ trust and use the opportunity to make intentionally fraudulent or careless decisions for their own financial gain. Although a client should always be able to trust his or her broker, it is important to keep a close eye on what your broker is doing and to look for suspicious activity. One common example is receiving an email communication from your broker from a personal email address instead of an official business email address. If you receive an email from your broker from a non-work email address, it should alert you to potentially fraudulent or negligent activity. At the Law Office of Steve A. Buchwalter, a skilled Los Angeles securities fraud attorney has helped investors throughout Southern California hold their brokers liable when they engage in unlawful conduct that costs them money.FINRA Rules Against Personal Email Communications
In a recent enforcement action, the Financial Industry Regulatory Authority (FINRA) investigated broker Jamie Bennett of Silber Bennett Financial, Inc. in Encino, California, regarding potential violations of FINRA regulations that require firms to retain emails and to use business-related emails for sending work communications. According to FINRA Rule 3110, a firm must create and oversee a system to supervise each firm member’s activities, including incoming and outgoing emails and electronic correspondence. Under Rule 4511, members of a firm are required to keep their emails regarding any securities-related business activities for a specific period of time. A securities fraud lawyer serving Los Angeles can go over the particulars of these rules if you suspect a violation in your case.
From October 2013 through November 2015, Bennett was required to oversee implementation of these document retention rules, including reviewing emails and ensuring that the firm maintained adequate records of its books and other important documents. According to FINRA’s investigation, Bennett failed to review or capture emails from representatives of the firm or other employees until 2015, making it possible that certain electronic communications were deleted.
Also, Bennett frequently, and nearly exclusively according to FINRA’s evidence, used a third-party email address that was not associated with Silber Bennett to conduct business related to securities transactions and the firm’s clients. When asked to produce these emails, Bennett indicated that he was unable to do so. Bennett received a $5,000 fine as a result of this conduct and was suspended for 30 days from engaging in any securities-related activities.Seek Compensation from a Negligent Broker
If your broker acts in a negligent or reckless manner and you suffer harm as a result, you can bring a negligence action against him or her, as well as the brokerage firm that employs the broker, to recover compensation for your damages. A knowledgeable Los Angeles securities fraud attorney can help you bring such an action. Brokers are held to a high fiduciary standard when it comes to engaging in securities transactions, and must adhere to the rules that FINRA establishes. If a broker’s violation of this duty leads to a financial loss, you can recover the difference between the actual value of your account after the negligent conduct and the estimated value of your account had the broker acted appropriately. In cases where the broker or brokerage firm’s conduct was intentional, reckless, and wanton, you may also be able to recover punitive damages, which are designed to punish a defendant for acting intentionally and to discourage others from engaging in similar behavior.Dedicated Securities Fraud Attorney Serving Los Angeles
We know that the last thing you want to deal with is figuring out whether your broker burned you. Our team will assist you in all aspects of your potential case, including gathering evidence, understanding FINRA, and ensuring that you receive the maximum amount of compensation that you deserve. We are available to provide responsive, diligent, and thorough legal counsel to investors throughout Southern California, including in Los Angeles, Encino, Pasadena, Beverly Hills, and other regions. We offer a free consultation to help you learn about your legal rights, so call us now at 1-800-678-8185 or contact us online.