Do You Have a Securities Case?

The securities industry is complicated and has a number of distinctive rules. There are a number of different abuses that can be committed. At SimmonsCooper, our focus is on getting you the compensation you deserve. Here are some of the securities cases we handle. 

Broker Negligence

Broker negligence generally occurs when a broker fails to recommend suitable investments for the customer.  Typically the broker invests the customer’s assets in securities that are too aggressive for the customer and expose the customer to inappropriate risk.  These are often referred to as “suitability” claims. 

Another type of broker negligence relates to failing to diversify properly a customer account.  Broker’s have a legal duty to the customer to only recommend securities which are suitable for the customer based on the customer’s age, financial circumstances, employment status, as well as the customer’s investment objective and risk tolerance level.

Churning

Churning occurs when the broker is acting in his own self-interest (by generating additional commissions through trades) even though the broker knows that his conduct is detrimental to the customer.  These trades can include trading in and out of stocks. 

Another churning technique of brokers is to trade in and out of long term investment products, which is more difficult for the customer to detect.  These products include mutual funds, bonds and sometimes variable annuities.

Mutual Fund Fraud

In addition to the fraudulent practice of mutual fund switching referenced above, brokers can obtain higher commissions by purchasing shares in the mutual fund that benefit him to the detriment of the customer.  This involves the broker purchasing Class B shares of the mutual fund instead of Class A shares.

Outside Investments

These claims involve the broker recommending investments in securities such as private placements or limited partnerships that are not offered through the broker’s brokerage firm.  Such conduct is strictly prohibited by the brokerage firm.  Usually the broker will make such a recommendation because he receives compensation from the company in which the customer is investing.

Conversion Fraud

In cases of conversion fraud, the broker takes the customer’s money without making any real investment.  Often brokers have the trust of their customers and will use that trust to “borrow” funds from the customer. This is strictly prohibited.

Variable Annuity Fraud

Variable annuity investments are rarely appropriate for the customer, especially if the customer is elderly and, in many cases, not generating income.  Brokers push customers into purchasing such securities because they offer the highest commissions to the broker.

If you believe that you are the victim of any of theses securities abuses, please contact SimmonsCooper for a free legal consultation.

Learn more about Securities Litigation:

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>  Securities Arbitration

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