Securities Arbitration

Investment fraud is prevalent for many reasons.  Investors entrust their savings with financial professionals, creating opportunities for fraud.  Scammers are drawn to the growing US population of seniors with large savings.  The sheer volume of brokers and advisors—there are more than 630,000 registered securities brokers and thousands of investment advisors— means inevitably some will be bad actors.

Often, brokers and advisors committing fraud develop relationships with their victims.  Such relationships may help fraudsters obtain information to perpetrate a fraud or conceal a fraud from a victim.

Victims of financial fraud have rights.  They should not forgo enforcing their rights because they blame themselves for being defrauded.  Investment fraud can happen to anyone, including the most experienced or inexperienced investors. 

Types of Fraud

Investment fraud occurs in many forms, including:

• Breach of contract
• Churning
• Misrepresentations and omissions of information
• Ponzi schemes
• Theft by brokers and advisors
• Unsuitable investment products and strategies
• Unauthorized trading

Legal Protections

Many laws, rules, and regulations prohibit securities fraud.  For instance, Rule 10b-5 issued under the Securities Exchange Act of 1934 prohibits individuals from intentionally using false information to sell securities.  Other examples include states’ “Blue Sky” securities laws.  Many states also have anti-fraud laws, like consumer laws, that apply to the sales of securities.  Additionally, regulators such as the Financial Industry Regulatory Authority, Inc. (FINRA) have rules that prohibit broker fraud.

Courts and arbitrators use these rules and laws to define duties that brokers, advisors, and their firms owe their customers.  When brokers, advisors, and firms breach these duties through fraudulent conduct, investors may pursue claims to recover their losses. 

Options to Pursue Recoveries

FINRA operates the world’s largest securities dispute resolution forum that resolves more than 95% of investors’ claims.  This includes most investors’ claims for losses caused by their brokers’ and firms’ fraud.

FINRA arbitrators may grant the same types of awards that are granted in courts, such as compensatory and punitive damages.  This also includes awards provided by specific state anti-fraud statutes, such as treble (i.e., triple) damages, if any such statute applies.

Investment fraud involves complex and specialized rules and laws, burdens of proof, and evidence.  Securities attorneys who represent investors specialize in this area of the law.  Investors should consult a securities attorney regarding their fraud complaints.

Marquardt Law Office LLC represents investors in FINRA arbitration claims to recover their losses caused by fraud.  Contact Marquardt Law Office LLC to speak with a securities attorney for a free case evaluation if you believe you have suffered losses due to your broker’s or brokerage firm’s fraud.