I lost a lot of money. Is it my financial advisor’s fault?
Investment losses alone do not necessarily mean there was wrongdoing, but if your losses resulted from your financial advisor engaging in misconduct, then the answer is “yes.” The most common forms of misconduct occur when your financial advisor:
- Gives advice, either with respect to a specific investment or your portfolio as a whole, that is inappropriate, unsuitable, overly risky or not in your best interest
- Makes misrepresentations about a specific investment or your portfolio
- Trades without authorization
- Trades frequently to generate large commissions
- Improperly encourages you to use margin or pushes certain investment products like annuities, leveraged ETFs and alternative investments
- Engages in elder abuse
- Commits fraud or steals your funds
Since all investments involve some level of risk, no financial advisor or firm can ever guarantee that your investments will not lose value. Thus, without misconduct, the financial advisor and/or their firm is not at fault.
For more information about common forms of financial advisor misconduct, please view the blog we wrote on the subject.
To recover your investment losses, you must prove the misconduct on the part of the advisor and/or the advisor’s firm. Often, this is complex and involves reviewing:
- Account statements
- Written agreements with the advisor’s firm
- Other applicable written agreements
- Emails and notes of discussions between you and your advisor
It is thus important to work with a law firm with industry experience and first-hand knowledge on how to properly evaluate whether your losses are due to misconduct and thus actionable.
What happens if I have a valid investment loss claim?
If your advisor and/or their firm engaged in misconduct such that they are either partly or wholly responsible for your losses, we will seek recovery on your behalf. On occasion, that can be done without having to file a lawsuit by contacting the firm on your behalf and negotiating a settlement.
When filing a lawsuit is necessary, in most cases, the written agreement governing the relationship will contain a provision requiring your matter to be brought in arbitration. Arbitration may occur before the Financial Industry Regulatory Authority (FINRA) or other arbitration forums such as the American Arbitration Association (AAA). Your action would be filed in court if there is no arbitration provision.
The time limitations for filing claims differ depending on the required forum. It is thus critical that you work with a law firm that understands what must be done as soon as you become aware of losses resulting from advisor misconduct.
How much of my money can I recover in an investment loss case?
The amount of recovery varies depending on the facts of circumstances of each case. Recovery in investment loss cases is usually based on actual losses and commissions that can be tied to the misconduct. The costs associated with asserting an investment loss claim (i.e. court/arbitration costs and expert witness costs) may also be recovered. In extreme circumstances, recovery might also include compensation for attorneys’ fees and/or punitive damages.
Our firm has significant experience analyzing investment losses so that we can tell you the approximate amount of potential damages.
How can I avoid becoming a victim of advisor misconduct and fraud?
The best way to prevent investment losses due to financial advisor misconduct and securities fraud is to remain vigilant. Monitoring your portfolio, particularly during periods of intense volatility, is an important first step. Additional steps you should take include:
- Ask questions: If anything is unclear, you should always feel comfortable asking your advisor questions. If they avoid answering the question or fail to give you an adequate response, ask again.
- Keep records of your communications: If your communications with your advisor are not memorialized via email or written correspondence, it is a best practice to take contemporaneous, accurate notes of your conversations.
- Conduct your own research: When your advisor recommends an investment, it is always good to complete your own due diligence to ensure that the recommendation aligns with your risk tolerance, time horizon and investment goals. Ask your advisor if you do not know the best way to conduct your own research.
- Review your advisor and their firm: The financial services industry is heavily regulated. Federal regulations require that certain public information on all financial advisors and their firms be made available to the public. You can find this information at finrabrokercheck.org (brokerage firms) or www.adviserinfo.sec.gov (registered investment advisors). If you have questions about what you see on these sites you, should ask your advisor or their firm.
What makes your law firm different from others that I could hire?
From our offices in Chicago, we have been involved in hundreds of investment loss cases for clients nationwide for the better part of our collective 55 years of experience.
Our attorneys have unparalleled experience. Prior to establishing Lewitas Hyman PC, our attorneys worked for United States Securities and Exchange Commission (SEC), brokerage firms such as Morgan Stanley, UBS Financial Services and EVEREN Securities, and at two of the world’s largest law firms.
Through this unique and diversified experience, we have a thorough understanding of the financial services industry generally, and as it relates to investment loss matters. Specifically, we know how financial advisors and their firms should operate, whether there is misconduct, and whether you have a case worth pursuing.