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FINRA Attorney Serving Individual Investors Nationwide

The fiduciary duty rule is among the most confusing and most hotly-debated protections afforded to individual investors. While investment advisors owe a fiduciary duty to their clients, investment brokers are not necessarily subject to the same standard. As an investor who has suffered losses due to inappropriate or self-interested investment advice, understanding your rights is the first step on the road to financial recovery.

If your rights have been harmed on by the financial services industry, Call us at (212) 742-1414.

Who Owes a Fiduciary Duty to Investors?

Under current federal laws and regulations, investment advisors owe a fiduciary duty to their investor clients. This means that they have a legal obligation to make investment recommendations with the investor’s best interests in mind, and they are prohibited from recommending or engaging in trades that put their financial interests before the interests of their client. If an investment advisor makes an investment recommendation because it will generate a commission or high fees – and not because it is a sound investment for his or her client – this would be a classic example of a breach of the fiduciary standard. Other common examples of fiduciary breaches include:

  • Intentionally misleading clients into particular investments for personal financial gain (i.e. recommending high-risk investments that can generate significant commissions to low-risk investors);
  • Failing to seek the best price and terms for a particular transaction; and,
  • Making personal use of an investor’s assets.

However, even in these types of situations, it isn’t always easy to tell whether an investment advisor has breached his or her fiduciary duty. As a general rule, if you have suffered sudden or unexpected losses in your portfolio, you should speak with a financial fraud attoney promptly. Even if you do not have a claim for breach of fiduciary duty, you may have other grounds to recover your losses through arbitration with the Financial Industry Regulatory Authority (FINRA), and acting quickly will give you the best chance to secure a financial recovery.

No one is immune to the risks of investment fraud. Scam artists and unscrupulous brokers do not discriminate when it comes to targeting unsuspecting investors.

- Jacob H. Zamansky

What Are Your Rights Against a Broker Who Offers Self-Interested Investment Advice?

Unlike investment advisors, most investment brokers are not subject to a fiduciary duty. While this comes as a surprise to many people, generally speaking, the law treats brokers as salespeople and not as financial advisors.

But, while brokers may not have a fiduciary duty, they are subject to various other legal standards. For example, under FINRA’s rules for registered brokers, brokers must always provide “suitable” investment recommendations. As a result, if you have invested with a broker, you may still have various grounds to pursue a financial recovery. We encourage you to contact us promptly to discuss your legal options.

Our FINRA Attorney Federal Protection Against Fraudulent Misrepresentations and Omissions

Rule 10b-5 promulgated under the Securities Exchange Act of 1934 is one of the investors’ greatest protections against investment fraud. In addition to generally prohibiting fraud in investment transactions, it also specifically prohibits investment advisors from making misrepresentations about material facts and omitting facts that are material to investors. A fact is considered “material” under Rule 10b-5 if it is a piece of information that an average investor would want to know before making an investment decision.

Examples of material facts that investment advisors often misrepresent or omit when discussing potential trades with their clients include:

  • The risks associated with a particular investment
  • Financial or legal risks facing the company selling stocks or bonds
  • Broker’s fees, commissions and other costs that will be charged to the investor

These are just a few of the most common examples. If you believe that you were misled into an investment in any manner, you should speak with an attorney about your legal rights.

No one is immune to the risks of investment fraud. Scam artists and unscrupulous brokers do not discriminate when it comes to targeting unsuspecting investors.

- Jacob H. Zamansky

Recovering Investment Losses Resulting From Broker or Investment Advisor Misrepresentations

As with any investment fraud claim, if you are concerned about a possible misrepresentation or omission, it is important that you take action as soon as possible with an experienced FINRA arbitration attorney. It will be helpful for you to collect the following information (if you have it) in preparation for your initial consultation:

  • Copies of your investment account statements from prior to and after the loss
  • Any emails, texts or other written communications you have from your broker or investment advisor
  • Any other documentation you received from your broker or investment advisor relating to the trade (or trades) in question
  • Your broker’s or investment advisor’s contact information
  • Any specific details you remember or questions you want to ask

Schedule a Free Initial Consultation With a FINRA Attorney at Zamansky, LLC

Unfortunately, in the investment world, fraudulent misrepresentations are common. Whether due to a lack of understanding of a particular security or investment strategy, or an intentional attempt to conceal relevant information (as often occurs when a broker or advisor has a financial interest in a particular transaction), investors are regularly asked to make decisions based upon incomplete or inaccurate information. When this happens and investment losses result, investors are entitled to recover financial compensation. The FINRA lawyers at Zamansky, LCC can help you file a claim and seek justice.

Zamansky, LLC is an investment and financial fraud law firm that represents individual investors nationwide. If you are concerned about losses in your investment portfolio, our attorneys can determine if you have grounds to recover financial compensation in FINRA arbitration. To get started with a free and confidential consultation, call us at 212-742-1414 or tell us how we can help online.

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