If a financial adviser takes advantage of a client, the client can recover those losses through the FINRA arbitration process. When clients open a brokerage account, in the new account agreement they contractually agree to have any legal disputes heard through FINRA binding arbitration. Investors win 51 percent of the cases that go to an arbitration hearing, according the most recent statistics available. Many other cases settle. Most lawyers will take these cases on a contingency fee basis. The most common claims include churning (overtrading of an account to generate fees and commissions), suitability claims (recommending securities that are too risky for the client given their age, investment objectives, and financial resources) and misrepresentation and omissions (not disclosing the true risks of the investment or misstating the risks).
Trust your instincts. At the first signs of impropriety, take the necessary actions to make sure your assets are protected.
– Chicago attorney and investor advocate Andrew Stoltmann has represented more than 900 individuals in lawsuits and securities arbitration actions against brokerage firms like Merrill Lynch, Morgan Stanley Smith Barney, Wells Fargo, and others. He is co-author of “Investor Rights for the Year 2000 and Beyond.”
