SEC Finding Spotlight: May 2018
We trust brokers to help us make the right financial decisions for our needs. Unfortunately, some brokers fail to provide investors with the services and candor that they deserve. Even worse, some brokers intentionally abuse the system in an attempt to pad their own pockets at the investors’ expense. At the Law Offices of Steve A. Buchwalter, our Los Angeles securities attorney has several decades of experience in this field, both as a former securities broker and as an attorney assisting investors. We pride ourselves on providing each client with the one-on-one, attentive legal counsel that they deserve during this confusing and stressful situation. There is no case too complex for our team to tackle.Hold Your Broker Accountable for Failing to Exercise Appropriate Discretion
There are many ways that brokers can fall short when it comes to meeting their clients’ needs. One of the primary ways is when brokers exercise unauthorized discretion in making decisions about their investor clients’ accounts. A recent settlement agreement provides an example of how this conduct can take place. Kevin C. Yang was registered with the brokerage firm Morgan Stanley in Pasadena, California and exercised discretion without written consent in 13 accounts belonging to nine investor clients, in violation of a key rule set out to protect investors.
The rule implicated in this situation was NASD Rule 2510(b), which prohibits brokers from using discretion in an account unless the client has given written consent and the account has been noted as a discretionary account by the broker’s firm. Morgan Stanley had not accepted these accounts as discretionary accounts. Yang was barred from trading for 20 days and fined $5,000. Morgan Stanley also terminated his employment based on concerns about his regulatory compliance.
There are many other rules that brokers must follow, especially rules promulgated by FINRA. This is a regulatory body that is designed to protect investors and to ensure candor and fair dealings in the marketplace. A seasoned securities lawyer can assist you in determining whether any violations may have been involved in the management of your accounts.
If you lost money as a result of your broker’s negligence or intentional fraud, you may be entitled to compensation. Brokers are held to a high standard of care when it comes to managing clients’ accounts. The financial market can be very difficult to navigate and understand, especially if you are a layperson with no experience. Brokers are expected to use complete candor and honesty when dealing with clients’ accounts, and they are required to be upfront about situations in which a bias may be present.
To show that your broker acted negligently, you must provide evidence establishing that the broker failed to act as a reasonable and prudent broker would have acted when facing a similar situation. This includes any instances in which the broker’s conduct was intentional and meant to deceive the investor. When it comes to damages, you can seek the difference between the value of your accounts after the negligent or intentional conduct and the estimated value of your accounts had the broker acted appropriately. If there is evidence to show that the broker acted intentionally or with malice, you can possibly seek punitive damages as well. This is a category of damages intended to punish defendants for their egregious conduct while discouraging others from engaging in similar acts.Speak with a Dedicated Los Angeles Lawyer Today
At the Law Offices of Steve A. Buchwalter, we know how daunting it can seem to navigate the legal process after your broker mishandles your accounts. While you are coping with the financial blow associated with the incident, we can investigate your claim and explore every possible avenue for recovering the money that you are owed. We proudly assist clients throughout Southern California, including in Los Angeles, Pasadena, Beverly Hills, Santa Barbara, Irvine, and Newport Beach. Call us now at 1-800-678-8185 or contact us online to set up a free appointment.