On June 23, 2016, the people of the United Kingdom voted by a margin of 52 percent to 48 percent to leave the European Union. The outcome of the so-called ‘Brexit’ vote remained uncertain until the referendum (in fact, many experts were predicting that the UK would remain part of the EU), and when the decision was announced it sent shockwaves around the world.
In just two days, global markets lost $3 trillion in value, including a $2.1 trillion single-day loss that topped the then-record $1.9 trillion lost when Congress announced that it would not be bailing out Wall Street in 2008.
Nearly all types of investments plunged in value following the Brexit vote. The Dow crashed. European stock markets crashed. Treasury bonds plunged. Foreign bonds fell even further than they already had. For individual investors who relied on the expertise and foresight of their advisors, sudden and substantial losses have left them asking: What exactly went wrong?
Did Your Broker Fail to Prepare for Brexit?
While the outcome of the Brexit referendum may have been up in the air, the financial consequences of a ‘Leave’ vote were not. Experts knew – or should have known – what would happen in the markets if the European Union’s second-largest economy decided to cut ties. A ‘Leave’ vote would inevitably mean losses across the substantial majority of investment sectors, leaving investors exposed to the fallout from the unprecedented separation.
Unfortunately, in the lead-up to the Brexit vote, many brokers failed to do what was necessary to protect their clients. While some markets have started to bounce back, many investors are a position to argue that they should not be stressing through the current wait-and-see climate. Their brokers should have been prepared, and they should have done more to protect their clients’ portfolios.
Brexit Losses Resulting from Broker Negligence
As we have previously discussed, brokers and brokerage firms can be held liable for individual investors’ losses when they fail to meet their duty of care. In addition to their fiduciary and other duties, all brokers and brokerage firms owe a duty to manage their clients’ portfolios with a certain level of knowledge and foresight. When brokers and brokerage firms fail to meet this duty (i.e. when they are “negligent”), and when this failure results in investment losses, their clients will often have claims for financial compensation.
So, if you suffered investment losses due to Brexit, was your broker’s negligence to blame? Not all bad decisions amount to negligence, but many of them do. If your broker misjudged the risks of a ‘Leave’ vote, if your broker failed to discuss the risks with you, if your broker failed to conduct due diligence or relied on incomplete information, or if your broker knowingly misrepresented the risks of a particular investment or investment strategy, these may all be grounds for you to seek to recover your losses. At Zamansky LLC, we have extensive experience representing clients in claims against their brokers, and we are happy to provide a thorough assessment of your legal rights.
Contact Zamansky LLC for a Free Consultation
If you suffered substantial investment losses following the Brexit vote and believe that your broker’s negligence or misconduct may be to blame, we encourage you to contact us for a free, confidential consultation. To speak with an investment fraud attorney at Zamansky LLC, call our offices at (212) 742-1414 or contact us online today.