SEC Finding Spotlight: September 2019

Securities Attorney for Los Angeles Area Residents

For many of us, brokers are a necessity when it comes to making investment decisions and managing our financial accounts. When you place your trust in a broker, you sometimes can be subjecting yourself to the risk that the broker is not going to play by the rules or treat you fairly. Far too common are instances of broker fraud, which involves situations where a broker exploits his or her clients’ knowledge for the purpose of increasing his or her own financial gain. This is simply unacceptable, and it’s also civil offense. A skilled Los Angeles securities fraud lawyer at our firm is prepared to help you hold a careless or intentionally fraudulent broker accountable for your losses.

Brokers Abusing Their Clients’ Trust

There are many different ways that brokers may try to abuse their client relationships. One of the most common is when a broker or brokerage firm tries to convince a client to engage in a private transaction that is not conducted through a broker-dealer. These off-the-books deals can be negative for a variety of reasons and most likely indicate that the broker is up to no good. A securities fraud attorney serving Los Angeles can evaluate whether a transaction of this nature violated the law in your case.

Recently, the Financial Industry Regulation Authority (FINRA) engaged in an enforcement action against broker Eric Savell of LPL Financial LLC in Roseville, California, for this exact type of conduct. According to FINRA, Savell’s client informed him that she wanted to take on more risk to increase her investment returns. Savell said that he was unable to provide this type of service but suggested that she invest in startups.

In July 2016, Savell informed a customer about a startup business called Company X and told the client that he knew the CEO of the company. Savell offered to arrange a private meeting between the CEO and the client for the purpose of encouraging the client to invest in the startup business. Savell had offered some unofficial, unpaid advice to the startup. After the meeting, the client invested $160,000 in the company according to a stock purchase agreement, which required the client to liquidate her official account with the brokerage firm. Savell did not inform his brokerage firm that he was engaging in this deal.

Private Securities Transactions

According to FINRA Rule 3280, private securities transactions are prohibited unless the broker provides written notice to the member describing the proposed transaction and his or her proposed role in the deal. This includes any securities transaction that is outside the regular course and scope of the broker’s employment, including offerings for new securities that are not registered with the SEC. Savell failed to complete this step of the process and was penalized as a result. FINRA Rule 3270 also prohibits brokers from earning side income from transactions outside the regular scope of business if they have not first provided written notice to the brokerage firm.

If you were financially harmed as a result of your broker’s conduct, a knowledgeable Los Angeles securities fraud attorney can help you assert your rights. You can bring a civil action to recover the difference between the actual value of your account and the estimated value that your account would contain had the broker acted appropriately. This requires proving that the broker in question breached his or her fiduciary duty to you. Our diligent team of legal professionals is standing by to help you determine whether you are owed compensation.

Schedule a Free Consultation with a Securities Fraud Lawyer in Los Angeles

If you think that your broker or brokerage firm has engaged in negligence or unlawful conduct that caused you to lose money or resulted in some other financial harm, we may be able to help. Our legal team understands how overwhelming this situation can be, especially if you are not completely familiar with the investment tools or securities that the broker used in your accounts. Representing clients throughout the Los Angeles region, including in Beverly Hills, Pasadena, Santa Barbara, and Newport Beach, we provide a free consultation to help you learn more about the causes of action that may be available to you and whether we can assist you with holding your broker responsible. Call us today at 818-501-8987 or contact us online to get started.