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The Two Things You Need to Prove to Pursue a Successful Claim for Stockbroker Fraud

May 31, 2024 Blog

If you have suffered fraudulent investment losses, pursuing a claim for stockbroker fraud could be your only option for getting back what you’ve lost. In many cases, investors can’t recover their fraudulent losses through ordinary market forces; as a result, they must seek to recover their losses directly from the broker or brokerage firm that is responsible.

The Key Elements of a Claim for Stockbroker Fraud

To pursue a successful claim for stockbroker fraud, there are two main things you need to prove: First, you must prove that your stockbroker committed fraud. Then, you must be able to clearly demonstrate how much you lost (and how much you are entitled to recover) as a result of the fraudulent conduct at issue.

1. Proof that Your Stockbroker Committed Fraud

Filing a successful claim for stockbroker fraud requires proof that your investment losses were not the result (or at least not solely the result) of ordinary market forces. While stockbroker fraud can take many forms, you must be able to prove the specific form of fraud that your stockbroker committed. Proving that your broker overconcentrated your portfolio, breached his or her fiduciary duty, or engaged in any other form of misconduct will typically require evidence such as:

  • Account records
  • Emails and direct messages
  • Prospectuses and other investment documents
  • The brokerage firm’s internal records
  • Expert witness testimony

2. Documentation of Your Fraudulent Investment Losses

Along with evidence that your stockbroker engaged in fraud, you will also need evidence of the consequences of your broker’s fraudulent conduct. Depending on the circumstances involved, this will generally involve calculating your damages in one of three ways:

  • Net Out-of-Pocket Losses – The “net out-of-pocket losses” calculation focuses on determining your aggregate negative financial position resulting from your stockbroker’s fraud.
  • Trading Losses – The “trading losses” calculation focuses on determining the total losses you suffered as a result of your stockbroker’s fraud, even if you were able to offset some of these losses through investment gains.
  • WellManaged Portfolio Losses – The “well-managed portfolio losses” calculation focuses on determining the difference between your current financial position and the position you would have been in had your stockbroker managed your portfolio effectively.

Here too, having evidence that proves your losses is essential to pursuing a successful claim. Account records and expert witness testimony can be crucial here as well, as an expert witness will be able to use your account history (among other sources of information) to determine how much you would have had in your portfolio had you not fallen victim to stockbroker fraud.

Discuss Your Stockbroker Fraud Claim with a Lawyer at Zamansky LLC

If you believe that you may be a victim of stockbroker fraud, it is important that you speak with a lawyer about filing a claim as soon as possible. To schedule a free, no-obligation consultation with a lawyer at Zamansky LLC, call 212-742-1414 or tell us how we can reach you online now.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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