Securities & Investment Fraud

Securities fraud and investment fraud come in many forms. Securities fraud ranges from deceptive practices, misrepresentations, omissions, intentional misconduct, professional negligence, failure to act in the customer’s best interest, and breach of fiduciary duty. Many investors may not even know or realize they are victims of investment fraud or that they have a legal right to recover their damages. Claims often revolve around faulty products and failures of brokerage and investment firms to conduct the rigorous due diligence required by law. While some cases do involve intentional misconduct by a broker or financial advisor, we understand that there are many cases where brokers and financial advisors themselves have been misled or abused by their own employers.

When a client trusts a financial professional such as a broker or investment advisor, there are always risks that the financial professional or firm take advantage of the clients trust, whether intentionally or through negligent conduct. We are dedicated to fighting aggressively for victims who have been harmed by stockbroker fraud, investment losses, and other damages.

Bixby Law PLLC handles all types of securities claims on behalf of investors. Some examples of the types of claims include:

Unsuitable Investments

Brokers and investment advisors are required to only recommend investments and investment strategies that are suitable for their customer’s risk profile, investment objectives, and needs. Recommendations are also required to be in the customer’s best interest. When an investor is sold an unsuitable investment, the unsuitable recommendation itself may be considered fraud or wrongdoing and the investor may be legally entitled to recover damages.

Various regulations and laws establish suitability obligations. For instance, FINRA Rule 2111 provides that firms and associated persons must meet three main suitability obligations to their customers:

• Reasonable-basis suitability requires a broker to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. Reasonable diligence must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.
• Customer-specific suitability requires that a broker, based on a particular customer’s investment profile, has a reasonable basis to believe that the recommendation is suitable for that customer. The broker must attempt to obtain and analyze a broad array of customer-specific factors to support this determination.
• Quantitative suitability requires a broker with to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile.

FINRA’s suitability rules not only require that individual recommendations of securities be suitable, but that any recommended “investment strategy involving a security” be “suitable for the customer.” FINRA Rule 2111. The requirement that investment strategies be suitable is meant to be “broad”, and even covers recommendations of an investment strategy which contains non-security investments, in addition to securities. See FINRA Rule 2111 (Suitability) FAQ.

Not only must initial recommendations of securities or investment strategies be suitable, but any recommendations to hold an investment must be suitable as well. FINRA Rule 2111.03 (“Recommended Strategies. The phrase ‘investment strategy involving a security or securities’ used in this Rule is to be interpreted broadly and would include, among other things, an explicit recommendation to hold a security or securities.”)

Other examples of Securities Fraud and Investment Fraud Claims include:

• Overconcentration
• Risky Options Trading Strategies
• Illiquid Investments
• Non-Traded REITs
• Private Placements
• Limited Partnerships
• Breach of Fiduciary Duty
• Misrepresentations
• Omissions
• Churning / Excessive Trading
• Excessive Commissions / Fees
• Ponzi Schemes
• Elder Abuse
• Failure to Supervise
• Improper Due Diligence
• Margin & Portfolio / Securities Backed Loans
• Complex Insurance Products (including Universal Life and Indexed Universal Life)
• Scams, Theft, and Third Party Fraud