Also available at KansasCityLaw.tv
In this video, Jason M. Kueser discusses typical causes of action in securities cases. These typical actions are: (1) fraud, (2) securities fraud, (3) breach of fiduciary duty, (4) breach of contract, (5) violation of state securities laws, (6) violation of federal securities laws, and (7) negligence.
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Also available at KansasCityLaw.tv
Also available at KansasCityLaw.tv
This video is provided for informational purposes only and nothing contained herein is or should be constituted as legal advice. If you have questions related to any legal topic, you should consult with an attorney and should not rely solely upon information provided via the internet. All content provided on this blog are subject to the Disclaimer at the bottom of the page.
According to a recent article on InvestmentNews.com, a study commissioned by Charles Schwab revealed that a significant percentage of investors are unaware of the losses sustained in their accounts. To make matters worse, more than one-third of the investors surveyed did not know which mutual funds they owned and less than one-third spoke with their financial advisor or stockbroker on a regular basis.
In the article, a Charles Schwab executive was quoted as stating that “some investors tend to be overwhelmed or intimidated by investing.” This is interesting because it confirms the important role that stockbrokers and financial advisors play in investors’ financial decisions. While this seems elementary, it astonishes me as to how many broker-dealers take the position in arbitration cases that the stockbroker or financial adviser played a passive role in the losses sustained in the investor’s accounts.
The survey also reported that 60% of the investors surveyed do not plan to make any changes to their investment allocations following the stock market’s rapid post-September descent. Stockbrokers and financial advisers often tell their clients to “stay the course.” In addition (or alternatively), many advisers and stockbrokers will show their clients charts or other documents that show how following a decline in the stock market a large portion of the recovery often occurs on select days — thus reinforcing their recommendation to stay the course, otherwise taking the risk that the investor will miss those few opportunities to participate in the recovery. Following this recommendation, clients feel forced to hold the same investments that created their losses.
It is important not to ignore losses in your investment accounts for many reasons, including but not limited to the following:
1. It is more difficult to recover from a significant loss than it is to sustain the loss in the first place. For example, if you start with $100,000 in an investment account and you sustain losses of 50%, the value of your account would be $50,000. Therefore, you would need a gain of 100% of this reduced amount ($50,000) in order to recover from the 50% loss you sustained.
2. If you are sustaining losses that cause you to lose sleep (or suffer other emotional distress), your investment accounts are probably invested in an unsuitable manner. This is something that you need to discuss with your stockbroker or financial adviser. If your adviser is unwilling to make significant changes to the accounts, or worse yet, if the stockbroker tries to reassure you that the investments are appropriate, you should seek a second opinion. In addition, you may want to consult with a securities attorney to discuss whether you have a legal claim.
3. If you decide to file a claim related to your losses, any failure to act could reduce or diminish your ability to succeed in arbitration or litigation. Whenever legal action is initiated, there are several issues related to the timing of the investor’s actions and the claim itself that must be considered (including statutes of limiations, equitable defenses, and arbitration eligibility rules).
When a stockbroker or financial adviser makes a recommendation to his or her client, they (and the firms they represent) may be liable for losses resulting from the recommendation. The Kueser Law Firm represents investors in securities arbitration. If you are concerned that your investments have been mismanaged, contact us to learn more about your rights.
On July 21, 2009, the Securities and Exchange Commission (SEC) charged Morgan Keegan & Company. In its Complaint, the SEC seeks an injunction for violation of the federal securities laws, as well as equitable relief for Morgan Keegan investors. Included in this equitable relief is a request for a court order requiring Morgan Keegan to repurchase illiquid ARS from its customers. More about the SEC’s case, including a link to the Commission’s Litigation Release and Complaint can be found here.
The SEC’s Complaint alleges that Morgan Keegan misled thousands of investors about the liquidity risks related to auction rate securities (ARS). This is another example of the massive fraud related to Auction Rate Securities that was perpetrated by financial services firms across the country. To date, several firms, including UBS, Wachovia, TD Ameritrade, Fidelity, and Stifel Nicolaus have entered into settlements with federal and/or state securities regulators. Some of these settlements have broader relief for investors, while others have left many investors still holding onto these illiquid investments.
If you were sold Auction Rate Securities and your positions have not been redeemed or repurchased, you should contact an attorney to discuss your rights. The Kueser Law Firm represents investors in securities arbitration and litigation. Feel free to contact us if you have any questions or would like additional information.
This morning, U.S. District Court Judge Denny Chin sentenced Bernard Madoff to the maximum sentence of 150 years of prison for his role in a “historic” multi-billion dollar fraud.
Judge Chin stated “Here the message must be sent that Mr. Madoff’s crimes were extraordinarily evil and that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll.”
Mr. Madoff’s “error of judgment” or “tragic mistake” (as he referred to his fraud) devastated the lives of thousands of people. While it is unlikely that Mr. Madoff’s former clients will receive any significant restitution, it is comforting to see that he was not able to buy leniency and that the maximum sentence was ordered.
It seems that each day there is another story about allegations that an investment adviser has stolen money from their clients. Yesterday, the SEC filed a complaint alleging that a New York investment adviser had bilked his clients, many of whom were terminally ill or mentally impaired, out of $6 million.
Where do you turn? The New York Times published an interesting article on June 5, 2009, discussing this issue. The Financial Industry Regulatory Authority has a publicly available repository of information related to securities professionals (BrokerCheck) and the SEC maintains the IAPD, which is a database containing information related to investment advisers. While these are valuable sources in checking the background of investment professionals, they are often inadequate. The New York Times also published an article about financial planners in their “need to know” series that is worth reading.
Unfortunately, investors do not learn that their adviser has taken advantage of them until after they have suffered devastating financial losses. The Kueser Law Firm represents investors that have been the victims of securities fraud, investment fraud, as well as other forms of stockbroker and financial adviser misconduct. In addition, the firm represents consumers that have been defrauded. If you would like to contact the firm for a free consultation, please call 816.374.5865 or visit our website, www.jmkesquire.com, for more information.
On June 10, 2009, the Securities and Exchange Commission charged Matthew Weitzman, a New York investment adviser, with defrauding his clients out of $6 million. According to the SEC’s Litigation Release (No. 21078), some of these clients were terminally ill or mentally impaired.
The SEC filed its complaint in the U.S. District Court for the Southern District of New York. The Litigation Release also states that:
The SEC alleges that Matthew D. Weitzman sold securities in clients’ brokerage accounts and illegally funneled their money to a bank account that he secretly controlled. While Weitzman spent the money on a multi-million dollar home, cars, and other luxury items, he provided false account statements to clients often showing inflated account balances and securities holdings. Weitzman also submitted to a broker-dealer phony letters from clients that purported to authorize the money transfers. When clients questioned Weitzman about the transfers they did not authorize, he misrepresented that he was withdrawing their funds to make legitimate investments.
Mr. Weitzman is the co-founder and a principal of AFW Wealth Advisors, which is an alternative name for AFW Asset Management, Inc., a registered investment advisor located in Puchase, New York. According to the SEC’s release, Mr. Weitzman was also the Compliance Officer for AFW.
This is another example in a long line of instances just this year where an investment adviser has been alleged to have abused the trust and confidence placed in them by their clients. Fortunately, securities regulators are taking a more active role in finding, investigating, and, where appropriate, prosecuting offenders. Unfortunately, clients are suffering millions, if not billions of dollars in losses.
The Kueser Law Firm represents investors that have been the victims of securities fraud, investment fraud, as well as other forms of stockbroker and financial adviser misconduct. In addition, the firm represents consumers that have been defrauded. If you would like to contact the firm for a free consultation, please call 816.374.5865 or visit our website, www.jmkesquire.com, for more information.