Featured Investigation: November 2019

When you agree to let a broker and/or brokerage firm manage your accounts, you give up a significant amount of control over your finances and your financial future. Your broker should explain this to you and ensure that you understand the scope of your relationship. Some brokers fail to truly inform clients about their authority to manage your accounts while others intentionally try to exploit your trust for their own financial gain. Los Angeles securities attorney Steve A. Buchwalter has substantial experience helping Southern California investors who have been burned by their brokers. If you think that your broker took advantage of your relationship, you can bring a negligence or fraud action against him or her as well as any brokerage firm that employs the broker to recover compensation for your losses. Attorney Buchwalter can potentially help you seek the compensation that you are owed after this unnecessary and tragic financial situation.

A recent enforcement action from FINRA sheds light on why it is critical for investors to have trustworthy brokers and to understand the nature of the broker-investor relationship. FINRA is the body charged with regulating the securities industry to ensure that brokers act with appropriate candor and responsibility when handling investors’ money. A knowledgeable securities lawyer serving Los Angeles will be familiar with all of the FINRA and related rules that may be relevant to your case.

Recently, FINRA engaged in a disciplinary action against broker Daniel G. Maughan who was registered as a General Securities Representative with Financial West in their Brentwood office located in Los Angeles. According to FINRA, Maughan engaged in over 1,600 trades totaling $70 million in value between October 2010 and January 2015, constituting excessive trading and churning under FINRA’s rules and regulations. As a result of making these excessive trades, Maughan generated $841,000 in commissions and costs while the accounts that he was managing generated only $812,000. During this time, Maughan also engaged in unsuitable trades. Some of Maughan’s clients were experienced investors who were still unaware of what was happening with their accounts and the level of discretion that he was exercising to their detriment. As a result of this conduct, FINRA charged Maughan with violating sections of the Securities Exchange Act as well as FINRA Rules 2111 and 2010 and NASD Rule 2310.

If you think that you may have been burned by your broker in a financial transaction, you can bring a civil claim against the broker and/or brokerage firm to recover compensation for the difference between the actual value of your account after the unlawful conduct and the estimated value that your account would contain had the broker acted appropriately. A seasoned Los Angeles securities attorney can help you determine who may potentially owe you compensation for your losses and assist you in asserting your rights to the fullest extent.

Brokers are held to the highest level of fiduciary care when it comes to managing other people’s money. This requires them to be candid and to always make decisions that are in the best interest of their client’s financial goals and well-being. To prevail in your claim, you must show that your broker failed to act according to this standard and that you suffered harm as a result. Also, if your broker worked for a brokerage firm, you may be able to bring a claim against the firm as well under a doctrine called vicarious liability, which holds employers liable for the tortious acts of their employees.

Attorney Buchwalter has assisted clients throughout Southern California, including in Calabasas, Pasadena, Hollywood, and Brentwood with understanding their rights after a broker abuses their trust and profits off of the relationship. He knows how important your financial security is, and that many investors rely on their brokers to meet specific financial goals. Attorney Buchwalter offers a free consultation to discuss your situation and whether he may be able to help you get your accounts back on track. To schedule an appointment, call us at (818) 501-8987 or contact us online to get started.