SEC Finding Spotlight: June 2019
When you retain the services of a brokerage firm or broker, you are relying on them to provide you with professional expertise and guidance in achieving your financial goals. Some investors have experience with investments and an understanding of the countless rules and restrictions that govern securities transactions. Many other investors lack this level of sophistication, however, making it easy for brokers and brokerage firms to exploit their trust and confidence. If you were the target of broker fraud or negligence, you may be entitled to compensation. A Los Angeles securities fraud attorney at the Law Office of Steve A. Buchwalter is available to help investors who have been burned by their brokers.Protect Yourself from a Fraudulent Broker
Brokers are subject to countless rules and regulations, and many of these come from the Financial Industry Regulatory Authority (FINRA). This body is responsible for ensuring that brokers engage in candor, fairness, and full disclosure when advising clients about securities transactions and making decisions about how to manage their accounts. If you believe your broker or firm failed to do this, a securities fraud lawyer serving Los Angeles and the surrounding areas can analyze the facts of your case.
FINRA is also responsible for enforcing these laws and for conducting investigations into potential violations. Recently, FINRA initiated an enforcement action against Thomas Edward Burns III, a Laguna Hills, California broker with Crown Capital Securities. According to FINRA’s investigation, between August 1, 2015, and July 31, 2016, Burns engaged in numerous mistakes regarding the identity of customer assets on Alternative Investment Forms, which resulted in the brokerage firm having inaccurate records.
FINRA discovered the mistakes when it examined customer complaints made against Burns. FINRA concluded that Burns caused violations of FINRA Rules 4511 and 2010. According to Rule 4511, brokers and brokerage firms are required to maintain intricate and accurate records regarding their clients’ accounts, net worth, and assets. If there is inaccurate information or misleading information in the records, the broker or brokerage firm can be penalized.
Also, when filling out the Alternative Investment Forms, Burns made mistakes including computational errors, classifying holdings improperly, and copying these errors across multiple forms. He was also found guilty of double-counting certain assets. As a result, Burns was suspended for two months and required to pay a $7,500 fine.Seek Compensation from a Negligent or Fraudulent Broker
Burns’ enforcement action highlights the significance of trusting your broker. If your broker asks you to falsify information in opening an account or buying an investment, it's wrong and could cause trouble later. In the event that you are the victim of fraud or negligence, you can bring a civil claim against the broker or brokerage firm to recover compensation for your losses, and a skilled Los Angeles securities fraud attorney can help.
In the action, you must prove that the broker or brokerage firm failed to act with the highest level of fiduciary care and candor. Brokers who falsify information or who make mistakes regarding key information in violation of FINRA rules have fallen short of this duty. Brokers are required to inform clients about transactions affecting their accounts, to adhere to a client’s wishes regarding his or her financial goals and desires, and to keep accurate records. You must next show that you suffered a financial loss as direct and foreseeable result of the broker or brokerage firm’s negligence or fraud. If successful, you are entitled to compensation totaling the difference of your account following the fraud and the estimated amount that your account would contain had the broker or brokerage firm acted with appropriate care.Speak with a Dedicated Securities Fraud Attorney in Los Angeles
Realizing that your broker or brokerage firm caused you to suffer unnecessary financial losses is a devastating and stressful situation. Given the complexity of regulations governing securities transactions, it can be difficult to understand the negligence or fraud that took place and whether you are entitled to relief. We provide a free consultation to discuss your situation and the legal options that may be available to you. Our team is available to serve clients throughout Southern California, including in Orange County, Beverly Hills, Hollywood, Malibu, Pasadena, Newport Beach, Santa Barbara, and throughout Los Angeles County. Call us now at 818-501-8987 or contact us online to set up your appointment.