SEC Finding Spotlight: October 2018
One of the biggest challenges that investors face is finding a broker or brokerage firm that they can trust. There are countless advertisements, review sites, and recommendations that investors must sift through before choosing someone to manage their funds. This is an incredibly important decision, which makes it all the more daunting. To help even the playing field and to provide investors with some transparency, there are rules regarding how brokers and brokerage firms can go about advertising for clients. Despite these clear rules, some brokers and brokerage firms bend the rules or blatantly disregard them in an attempt to mislead clients for the purpose of getting their business. At the Law Office of Steve A. Buchwalter, we proudly serve Southern California residents with seeking justice after being burned by their brokers, including through incidences of misleading advertising. Call us today to learn more about how an experienced Los Angeles securities attorney can assist you.FINRA’s Rules Against Misleading Advertising
The federal agency responsible for managing securities activities is called the Financial Industry Regulatory Authority, or FINRA. This agency writes and enforces rules that govern all registered broker-dealer firms and registered brokers within the country. The primary goal of FINRA is to ensure that investors can rely on fair financial markets through basic protections and truthful product advertising.
Part of FINRA’s responsibilities also includes bringing enforcement actions for violations of its rules. Recently, Newport Beach-based broker Frank T. Marino was subject to a FINRA enforcement action involving misleading advertising. He was the CEO and chairman of a corporation that was formed to manage pooled investments. He was also registered with two broker-dealer firms, MARV Capital and Privex Securities.
According to FINRA’s investigation, Marino was responsible for creating content for the investment-related website that he used to obtain clients. The material and content on the website failed to comply with key FINRA rules regarding communications with the public. FINRA Rules 221(d)(1) and 2010 require member communications to be based on fair dealing and good faith while providing investors with a sound basis for evaluating different types of securities or services. It is unlawful for brokers to omit material facts that would result in the communication being misleading.
Marino’s company marketed itself to investors with communications that contained false and misleading statements regarding the Company’s registration status and failed to include the necessary risk disclosure statements that would provide investors with a balanced discussion of the company’s benefits. The content also made embellished statements regarding the potential investment returns that investors would see. As a result of these violations, Marino was subject to six months’ suspension and required to pay a $15,000 fine.Seeking Compensation from a Fraudulent or Negligent Broker
If you suffered financial harm as the result of a broker’s misconduct, you can bring a claim to recover compensation, and a knowledgeable securities lawyer can help. In the lawsuit, you must establish that the broker owed you a duty and failed to advise you and to handle your investment accounts according to that duty. Because brokers have a sophisticated level of knowledge compared to investors, the law holds them to a high level of fiduciary care and candor when dealing with investors. This involves disclosing the benefits and disadvantages of particular investments, not engaging in investment deals for the purpose of self-gain, and adhering to the investor’s financial wishes and goals. Breaches of FINRA rules can also serve as a basis for showing that the broker failed to act with appropriate care because reasonable and careful brokers would adhere to these rules at all times.
After showing that the investor failed to act according to this duty and that the failure was the direct cause of your financial losses, you should be entitled to recoup the difference between your accounts after the negligent or fraudulent conduct and the estimated value of your accounts had the broker acted appropriately.Consult a Skilled Securities Attorney Serving Los Angeles
We understand how confusing and frustrating it can be for you and your family if you have been misled by an investment professional. You work hard to ensure your financial stability, and trust your broker to treat you with the candor and respect that you deserve. When a broker abuses this trust and engages in negligent or fraudulent conduct, the losses can be devastating. Serving clients throughout Beverly Hills, Santa Barbara, Pasadena, Irvine, and Newport Beach, among other cities throughout Los Angeles, Ventura, and Orange Counties, we offer a free consultation to discuss your matter. Call us at 818-501-8987 or contact us online to get started.