Personal Injury Attorneys

Cleveland & Ohio Statewide
Landskroner Grieco Merriman, LLC

Broker / Securities Fraud

Complicated broker fraud cases demand an experienced securities fraud law firm

Stockbrokers and investment advisers owe their clients a duty to manage and invest their money in a suitable and ethical manner. Unfortunately, some stockbrokers violate that trust and put their own financial interests ahead of the interests of their clients. In other instances, some financial advisers engage in unethical practices or even break the law.

As more individuals turn to stockbrokers and investment advisers to save for education or retirement, cases of broker misconduct have steadily increased in recent years. The most common examples of misconduct involve recommendations of unsuitable investments and churning. Often, these cases involve brokers pushing clients to purchase products that benefit brokers, not clients.

Stock broker fraud cases can be extremely complicated. Without the proper legal guidance, your rights might not be protected. With so much at stake, it’s best to contact an experienced broker fraud attorney who understands the law and knows how to get results. Oftentimes these claims are governed by arbitration agreements which require disputes to be resolved by FINRA – which is a regulatory body for stock brokers and investment houses. That’s why we strongly advise you to contact Landskroner Grieco Merriman, LLC, as soon as possible.

What are common types of broker, securities fraud cases?

Cases involving stockbrokers and securities fraud may involve the following elements:

Whatever type of situation you’re dealing with, no matter how straightforward it might seem, don’t underestimate the complexity of your case. Make sure you have an aggressive attorney exploring every legal option available to you.

Why should I hire Landskroner Grieco Merriman law firm?

Many brokerage firms and investment companies employ thousands of people and manage millions – or even billions – of dollars in financial assets. If you attempt to take on such large financial institutions on your own, you could encounter fierce resistance and an army of attorneys defending the actions of the stock broker managing your money.

They don’t intimidate us. Our law firm knows how to investigate such cases, negotiate with other attorneys and hold stockbrokers accountable for their actions. We know what evidence to look for, what questions to ask and how to achieve the best possible results for our clients. If necessary, we can help you file an individual lawsuit or even a class action lawsuit against a brokerage firm on your behalf.

Find out how our results-oriented attorneys can help you achieve justice. Contact our law firm today. Call 866-823-3332 for a no cost consultation with Landskroner Grieco Merriman, LLC. Your best interests come first here.


Stockbroker Misconduct

Relationships between stockbrokers and their clients are based on trust and responsibility. Investors bring brokers their hard earned money and trust them to protect and invest those assets. Investors also rely on brokers’ insights and guidance for reaching their investment objectives.

In some instances, investors may be planning for retirement or saving for a child’s education. Other investments are placed to generate interest income for living expense, and still others invest to try to grow their wealth to pass on to their family. In each case, stockbrokers and investment advisers have a fiduciary duty to put their clients’ best interests before their own.

Unfortunately, some brokers ignore such practices and put their clients’ assets unnecessarily at risk or take advantage of their clients’ trust. Examples of such broker misconduct include:

  • Churning – Stockbroker moves a client’s money from investment to investment to earn additional fees.
  • Excessive fees – Broker places money in funds that pay higher commissions or fees.
  • Unsuitable investments – Broker ignores client’s investment objectives.
  • Fraud – Broker intentionally fails to disclose material information about an investment or falsifies statements and financial reports.
  • Unauthorized trading – A broker buys or sells a security in the account of an investor without permission.

In such cases, investors may be able to pursue a claim to recover for losses associated with such conduct. Such actions by brokers may also give rise to claims against financial advisers to recover related losses.

Most claims and disputes against stock brokers and investment advisers are contractually governed by arbitration agreements regulated by FINRA (Financial Industry Regulatory Authority). FINRA disputes do not go to court, but rather are resolved in a proceeding which takes place privately before a panel of three specially selected arbitrators. The FINRA arbitration process is generally an efficient and economic means of resolving claims and with the help of experienced counsel can provide accountability and recourse for those investors who suffer financial loss at the hands of a reckless, self-serving investment adviser and/or as the result of fraudulent investment schemes

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Securities Fraud

Securities fraud often involves publicly traded companies issuing false and misleading statements about the company’s financial performance and operations. Other examples of securities fraud include fraudulent accounting practices or omissions meant to deprive the general public of knowledge necessary to make educated and informed decisions about the company. Civil securities fraud, also known as investment fraud, is a practice where investors are deceived and manipulated by the company resulting in economic loss.

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Breach of Fiduciary Duty

Such violations often involve individual a stockbroker or large investment firm placing their best interests before individual investors. Specifically, when a stockbroker agrees to perform a specific duty (purchase or sell a stock, for example), that broker has a legal obligation known as a fiduciary duty to perform that task at the best price possible for his or her client.

Other times, breach of fiduciary claims involve a corporation’s directors or executive officers like a CEO or CFO attempting to profit from knowledge about the company not available to fellow officers or the public at large. In such instances, a shareholder derivative lawsuit can be brought by an individual shareholder in the name of and on behalf of the corporation. Often, the defendant in a derivative lawsuit is an insider of the corporation, including director of the company or another high-ranking official.

Derivative claims can also be brought against other third parties that have harmed the company. Under normal circumstances, even though the shareholders are the owners of a corporation, the shareholders must defer to the business judgment of the executives and board who are charged with running the corporation. This would include directing and managing litigation where it is necessary to bring claims to remedy wrongs against the company.

However, where the harm that has been done to the company arises from the misconduct of the individuals charged with running the company, the shareholders, under these unique circumstances, must step into the shoes of the corporation, by bringing a derivative lawsuit against these insiders to protect the interest and the health of the company or to prevent insiders from profiting when their personal interests have been placed before the company’s interest.

In order to bring a shareholder derivative action, the plaintiff simply needs to maintain ownership of a single share of the company and must continue to hold this share at all times relevant to the litigation. In addition, most jurisdictions have implemented a number of procedural requirements which must be undertaken by the shareholder in order to bring such a claim, establishing in part, that the executive(s) have failed to act on such claims and that there exists a futility of demanding the officers and directors to act because they are interested parties, i.e. they are not likely to sue themselves. The remedy in these cases often includes changing corporate policy and governance requirements, replacement of officers and/or board members and recouping the economic losses to the company resulting from insider self-dealing. Proceeds of recovery on a shareholder derivative claim are awarded back to the company to help repair the damage done by the wrongful conduct of its executives and officers.

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Shareholder Lawsuits (Derivative Claims)

Shareholders of publicly held corporations can pursue claims alleging fraud and seeking to recover damages for their financial losses in their investments under the Securities Exchange Act of 1934. Section 10(b) of the Exchange Act and SEC rule 10b-5 govern these claims and require a plaintiff to prove that a defendant made material misrepresentations or omissions in the sale of a security and acted with “scienter,” a wrongful state of mind, resulting in an economic loss.

Shareholder actions of this nature are typically are pursued as class action lawsuits. That’s because fraudulent statements or omissions are often made to the market as whole as opposed to any one individual. As a result, everyone who invested in the company suffered financial losses. Examples of such cases which resulted in shareholder class action lawsuits include the notorious downfall of the Enron and Worldcom companies which caused billions of dollars of losses to investors and highlighted the absence of adequate regulation and oversight existing on Wall Street and governing the securities markets in this county.

In one case we handled involving a shareholder derivative action, we obtained a $70 million settlement. The 2007 case is Staehr v. Cardinal Health. Shareholder derivative claims for alleged breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment by officers and directors of Cardinal Health.

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