Knowing whether you can trust your broker to make appropriate recommendations and decisions for your financial health may be difficult. Most of the time, brokers do uphold their duty as fiduciaries and provide sound, reasonable financial advice. In other situations, however, brokers either act carelessly when it comes to addressing their clients’ needs or take advantage of a client’s lack of sophistication to make themselves more money. Los Angeles securities fraud lawyer Steve A. Buchwalter has assisted investors with holding their brokers responsible for careless and reckless acts like stuffing.How to Tell if Your Broker is Stuffing Your Accounts
There are many different ways that a broker may take advantage of an investor. One common example is known as stuffing. This occurs when a broker sells undesirable securities from their own account to a client’s account. This allows the broker to pass off these unfavorable or unprofitable investments without needing to incur any losses for the brokerage firm. This method may also help a brokerage firm offload securities that are hard to sell in the market, either because the securities are undesirable or because of unfavorable market conditions. Proving that a broker engaged in stuffing may be difficult. In many instances, an investor authorizes a broker to make trades without the client’s consent. To justify a trade, the broker need only show that the purchase was suitable for the investor’s accounts.Bringing a Lawsuit for Compensation
If your broker engaged in careless or reckless management of your accounts, you may bring a negligence or fraud claim to recover compensation. Since most brokers possess a more sophisticated knowledge base than investors, the law holds them to the highest level of fiduciary care. This means that a broker must be candid with an investor at all times, disclose key information regarding their accounts and potential investment decisions, and always make decisions that are in the best interest of the investor, even when the broker might gain from making an alternative decision. The plaintiff must show that the broker breached this duty of care, either carelessly or intentionally. Some examples of intentionally breaching the standard of care include fraud, misleading clients about pertinent financial information, or concealing key information from clients. After showing a breach, the plaintiff may be entitled to receive the difference between the actual value of their accounts after the negligent or reckless actions and the estimated value that their accounts would have had if the broker had acted with due care.Retain a Dedicated Los Angeles Lawyer for a Claim Based on Stuffing
If you were burned by your broker, we can help. At the Law Offices of Steve A. Buchwalter, our lead attorney has several decades of experience in securities law, which means that he knows what it takes to bring a successful claim against a careless broker who engaged in stuffing or another form of misconduct. Our team of experienced legal professionals has counseled investors throughout Southern California, including in Pasadena, Beverly Hills, Santa Barbara, Irvine, Newport Beach, and other cities in Los Angeles, Ventura, Santa Barbara, and Orange Counties. To schedule a free consultation with a broker negligence attorney, call us at 818-501-8987 or contact us online to get started.