Mishandled Investments: Who is Watching Your Money?

When you deposit your hard-earned money with a stockbroker or other financial institution, you trust they are making decisions in your best interest. Unfortunately, this is not always the case. Whether the investment adviser acted intentionally or simply failed to exercise ordinary care, it is important to know the warning signs of suspicious activity in your account.

Common examples of inappropriate handling of your account include:

  • unauthorized transactions (buying or selling securities without your permission);
  • churning (excessive trading of securities to generate broker commissions);
  • unsuitability (recommending changes to your portfolio which are inconsistent with your age, net worth and investment objectives);
  • failure to recommend appropriate changes to your investment holdings (i.e., keeping a client in speculative commodities when the circumstances dictate a much more conservative holding); and
  • failure to monitor a rogue broker (i.e., a stockbroker asks a client to invest in a side company unaffiliated with their employer).

When an investment advisor, bank, trustee or other financial representative engages in inappropriate conduct, you may have legal rights to recover your losses. Typically, a customer who loses money will make one or more of the following claims:

  • Fraud/misrepresentation;
  • Negligence by the broker;
  • Negligent supervision and/or negligent hiring by the broker’s employer;
  • Breach of fiduciary duty; and
  • Breach of contract.

If you or your family member lost money in one or more of your investment accounts, you should speak with legal counsel immediately to determine your/their legal rights.

*DISCLAIMER: This blog post is not legal advice, as each situation is dependent upon the facts and circumstances at hand, and any action should be taken only after consulting with an attorney.