Traditional Investment Claims.

The state and federal laws are generally designed to provide relief where a broker has breached a duty and the customer has suffered damages. Customers trust brokers to be honest and invest their money appropriately. While there are no guarantees in the market, we expect our investment advisors, brokers, and financial advisors to do what is in our best interests. Although most do a good job, there are some who are reckless with your money, put you in unsuitable investments, or commit outright fraud. If you believe that you have suffered damages as a result of a bad investment, please contact the attorneys at PersanteZuroweste to discuss your situation.

Sale of Unregistered Securities:

It is a violation of Florida law for a Broker or Dealer to sell an unregistered security, unless the security is exempt. For more information about unregistered securities, click here.

Breach of Fiduciary Duty:

Breach of fiduciary duty is one of the most common claims asserted by investors in securities litigation and arbitration. The law generally considers a broker to owe a fiduciary to the investor, and to meet industry standards in handling the investor’s money. When a broker breaches the investor’s trust, the industry regulations, or the law, the broker and the brokerage firms may be liable.

Misrepresentation and Omissions: 

Misrepresentation occurs when a broker misrepresents or omits material fact related to a security or an investment.

Account Churning: 

Churning occurs when, in order to obtain commissions, a broker causes securities in a customer’s account to be traded too frequently given the customer’s financial needs, resources, or investment objectives. Excessive buying and selling for personal gain violates securities laws.

Unsuitable Investments: 

All brokers have a duty to “know their customer” before recommending an investment. The investment must be suitable given the customer’s age, investment objectives, risk tolerance, experience, time-horizon and financial situation. And, the broker must have a reasonable basis for recommending a particular security to the customer. If the broker advises a customer to invest in unsuitable securities or securities which the broker had no reasonable basis for recommending, the broker and broker dealer may be responsible for the investment losses.

Failure to Diversify: 

One of the most basic principles of sound investing is maintaining a diversified portfolio. If a broker fails to diversify the portfolio by over-concentrating in a single investment or industry, the broker and broker dealer may be liable for portfolio mismanagement.

Unauthorized Trading: 

An unauthorized trade occurs when a broker trades a security without the customer’s knowledge or permission.  A broker cannot make trades without your consent unless you have given your broker written “discretion” or “trading authorization.”

Failure to supervise: 

Securities brokerage firms have the legal duty to supervise their brokers and their brokers’ recommendations to clients to ensure compliance with and prevent violations of industry rules. When a broker is negligent or acts in an unlawful manner against the interests of the client and that client suffers damages as a result, the brokerage firm may be held liable for the investor’s losses.

Negligence: 

Negligence occurs when a broker fails to use reasonable diligence and skill in handling the customer’s account.

Securities Fraud: 

Securities fraud relates to a deceptive practice that induces investors to make purchase or sale decisions on the basis of false or incomplete information, in violation of securities laws. The term securities fraud covers a broad range of illegal activities, and often also includes other securities violations, such as misrepresentation or omission, breach of fiduciary duty, unsuitability, and unauthorized trading.

Federal Securities Violations:

On the federal level, Section 10(b) of the Securities Exchange Act of 1934, promulgated under U.S. Securities and Exchange Commission, prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security.  More specifically, Section 10(b) makes it unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange to use or employ, in connection with the purchase or sale of any security, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Securities and Exchange Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Florida Securities Violations:

In Florida, Florida Statutes Chapter 517 governs securities fraud, and defines securities fraud to arise when someone directly or indirectly engages in any device, scheme, artifice to defraud, misrepresentation, act or practice which operates as a fraud in connection with the purchase or sale of a security or in the rendering of investment advice.

What duties does your stock broker owe?

• To recommend an investment only after studying it sufficiently to become informed as to its nature, price and financial prognosis;
• To carry out the customer’s orders;
• To inform the customer of the risks involved in purchasing or selling a particular security;
• To refrain from self-dealing or refusing to disclose any personal interest the broker may have in a particular recommended security;
• Not to misrepresent any fact material to the transaction; and,
• To transact business only after receiving prior authorization from the customer.