The fact that your investment has decreased in value or that you, like millions of others, have lost money does not automatically mean that your broker or brokerage firm has engaged in actionable misconduct. Almost all investments involve risk and there is no bailout when you lose money in risk appropriate investments. However, if your investments have decreased in value as a result of action or inaction by your broker, you may have a valid claim. Below are several common claims against investment professionals/brokerage houses:
1. Recommending unsuitable securities: Claims for suitability arise when an investor is advised to purchase or sell a security that is unsuitable given – an investor’s age, financial situation, investment objective and investment experience – the investor’s profile. Claims for suitability can be based upon a recommendation of a certain type of security, a certain class of securities, the amount of an investment or the frequency of transactions.
2. Misrepresentation/Omission: These claims arise when an investment professional misrepresents or fails to disclose material facts concerning an investment, including but not limited to, a failure to disclose: a) the risks associated with an investment; b) the fees associated with a particular investment; and c) company financials, such as bond ratings.
3. Churning: A claim for churning arises when an investment professional engages in excessive trading within an investor’s account in order to generate commissions.
4. Failure to Supervise: Brokerage houses have an affirmative duty to supervise the activities of their brokers and a failure to do so may be the basis of a claim.
DANIEL M. HANIFIN
P.O. Box 515
West Chester PA 19381-0515