Investment Advisor/Stockbroker Malpractice

At Fields, Dehmlow & Vessels, we represent individuals and families who have been the victims of financial fraud or incompetence at the hands of financial advisors, stockbrokers, insurance salespersons, or trustees of trusts.

Certainly, in the current market environment, not every bad investment result is the fault of the financial advisor. Every investment has risks. Risk involves the possibility of loss. The question in most cases is: did the advisor have the ability to foresee the loss, prevent the loss, or mitigate the loss? Further, in many cases, we are seeing financial advisors act in their own interest, not necessarily in the interests of their clients.
The following are categories of investor losses that we have seen:

Failure to diversify. One of the cardinal rules of investing is to diversify the portfolio. This is a hedge on risk. Don’t put all of your eggs in one basket. Don’t over concentrate in one investment. Unfortunately, whether through neglect or misguided belief, we have seen brokers and trustees place large percentages of their client’s wealth in a single stock—only to see that stock lose its value.

Unsuitable investments. An investment advisor has a duty to understand his or her client’s financial situation and investment goals. Perhaps, if the client is wealthy and wishes to take a gamble on a high-risk stock, new stock offering, or futures contract, these types of investments can be perfectly acceptable. However, some investment products are too risky for clients with smaller portfolios, particularly those approaching, or in, retirement. The high risk of loss makes the investment unsuitable for the client.

Churning. This is a type of broker fraud that occurs when a stockbroker makes numerous trades for the purpose of creating transaction fees.

Unauthorized transactions. Similarly, brokers may not make any transactions that are inconsistent with the client’s directives.

Misuse of variable annuities. Variables annuity insurance contracts are valid investment vehicles. But, they present problems. These are complicated insurance contracts that often involve large fees and expenses. Sometimes, these fees and expenses are hidden, or at a minimum, not fully explained. Furthermore, some agents target the elderly with long-term annuity contracts that are not suitable for the client’s age and are burdened with large commissions. And to compound the problems, many sales representatives do not explain the risk associated with variable annuities. These are investments that can lose value.

Fraud and theft. Yes, this happens. It happens more than people realize. Bernard Madoff is the most famous, certainly not the only. There are many ways financial fraud can occur. Sometimes, it is as simple as the investment advisor taking the money out of the client’s account. Other times, it is a complicated Ponzi scheme. Some stockbrokers have advised clients to buy stocks, while not disclosing that the broker has a large position in that stock also—using the client to increase the share price.

When we accept financial fraud and malpractice cases, we work on a contingent fee. There is no fee if there is no recovery. If you suspect that you have suffered loss because of a broker or investment advisor’s errors or outright fraud, please call us at 740-374-5346 or contact us and we’ll get in touch with you.