Practice Areas Broker Misconduct Broker Negligence

Broker Negligence Attorney

Brokers have a duty to their clients to act with care. Failure to do so may result in a cause of action for negligence. The bar for proving negligence is not as high as fraud or misrepresentation, but collecting damages can be difficult without knowledgeable counsel. Contact an experienced broker negligence attorney at Zamansky LLC to help with broker negligence claims.

Zamansky LLC concentrates its New York City practice on representing investors in broker misconduct claims. We regularly handle FINRA arbitration and class action litigation involving losses arising from breach of fiduciary duty, fraud, and negligence of major brokerage firms. We recently recovered damages in claims involving Puerto Rico bond funds, energy sector investment losses, commodities investment losses, and other high-yield, high-risk bonds.

Elements of a Broker Negligence Claim

The elements of a negligence claim overlap those of a breach of fiduciary duty claim. In fact, our stock broker fraud attorneys often find sufficient evidence to bring both causes of action.

To prevail in a negligence claim, the investor must prove:

• The broker owed the investor a duty
• The broker breached that duty by an act or omission
• The breach caused harm to the investor
• The investor suffered damages as a result of the breach

Not all bad decisions or mistakes rise to the level of negligence. A broker may recommend a transaction that resulted in losses, but still not have acted negligently. Likewise, a broker may have acted negligently and yet the investor did not suffer provable losses.

Our attorneys have extensive experience in investigating junk bond losses, proving negligence and establishing damages.

Negligent Broker Actions in Junk Bond Transactions

Brokers are required to remain well-informed about the long-term trends and immediate fluctuations in the market, to understand their clients’ financial situation and goals, and to advise investors from a position of knowledge and care. A failure to satisfy these basic duties may rise to negligence.

Common broker actions that may rise to the level of negligence include:

• Mischaracterizing a high-risk transaction as low-risk
• Explaining the potential high-yield aspect of an investment, but not its high risk
• Failing to conduct due diligence before making a junk bond recommendation
• Recommending an unsuitable high-risk junk bond to a client with a low risk tolerance
• Recommending junk bonds to an investor with a portfolio that includes an inappropriate percentage of non-investment grade securities
• Making a false statement of material fact, whether purposefully or unintentionally
• Basing an investment recommendation upon bad information
• Failing to act with the skill and knowledge expected of brokers

Do You Have a Claim for Broker Negligence?

As an investor who works with a broker to make investment decisions, it is important to know when you have a claim for broker negligence. If your broker has been negligent, not only could you be at risk for future investment losses if your broker makes additional mistakes, but you may also be entitled to recover your past losses in FINRA arbitration.

How can you determine if you have a claim? The best way is to speak with an experienced broker negligence attorney as soon as possible. Your attorney can evaluate your legal rights in circumstances such as:

• You Lost Money in a High-Risk Investment – High-risk investments are not suitable for most retail investors. So, if your broker recommended a high-risk investment, this alone may be evidence of negligence. If your attorney’s investigation reveals that your broker failed to identify risks associated with the investment, did not fully understand the investment, or failed to adequately relay the risks to you, these are all factors that could strengthen your claim for financial damages.
• Your Broker Recommended an Unsuitable Investment – Risk is one of several factors that brokers must consider when determining if an investment opportunity is suitable for a particular investor. Overlooking (or misinterpreting) factors that render an investment unsuitable is a common form of broker negligence. Additionally, just because an investment is suitable for one investor, this doesn’t necessarily mean that it will be suitable for another. If your broker has been making blanket recommendations to multiple clients, this may justify a claim for broker negligence as well.
• Your Broker Recommended a Fraudulent Investment – Ponzi schemes and other forms of investment fraud are very real risks for retail investors. In nearly all cases, brokers should be able to spot red flags that prevent them from recommending these investments to their clients. If your broker failed to identify (or ignored) red flags for fraud, his or her negligence may be to blame for your fraudulent investment losses.
• You Suffered Substantial Losses Due to Overconcentration – Overconcentration is a common sign of broker negligence. When recommending investment options, your broker should tailor his or her recommendations to your existing portfolio. If a particular investment would result in overconcentration, then it generally shouldn’t be recommended. Your broker has a duty to help make sure your portfolio is adequately diversified, and if your broker has breached this duty, you can (and should) hold your broker accountable.
• Your Broker Breached His or Her Fiduciary Duties – When brokers breach their fiduciary duties, this is often a sign of intentional broker misconduct. But, in some cases, fiduciary breaches can result from brokers’ negligence. If your broker was negligent in failing to disclose a conflict of interest, failing to disclose other material information or committing any other form of fraud, these are all scenarios in which a broker negligence attorney may be able to help you.

These are just examples. Broker negligence can take many different forms, and brokers routinely make mistakes that lead to investor losses. If you have concerns about the quality of your broker’s advice or the suitability of your broker’s investment recommendations for any reason, you should speak with a broker negligence attorney promptly.

How a Broker Negligence Attorney Can Help

If you have suffered investment losses due to your broker’s negligence, hiring an attorney promptly will give you the best chance to recover your losses. Brokers can be held liable when their negligence leads to losses, and brokerage firms can be held vicariously liable for their brokers’ negligence as well. When you hire a broker negligence attorney, your attorney will evaluate all potential claims against your broker and brokerage firm, and then your attorney will take appropriate legal action on your behalf.

Here are some of the ways a broker negligence attorney at Zamansky LLC can help you:

1. Investigating and Proving Your Broker’s Negligence

One of the first steps your attorney will take will be to investigate your broker negligence claim. Your attorney will collect and review the evidence that is available, and then your attorney will conduct a comprehensive assessment of your legal rights. If necessary, your attorney can obtain additional evidence through the discovery process after filing for FINRA arbitration.

2. Preserving Your Legal Rights

Depending on when your broker was negligent, you may need to act quickly to preserve your legal rights. Your attorney can explain how long you have to file your petition for arbitration, and your attorney can file your petition promptly if necessary. If you run out of time to file, you will lose your ability to recover your investment losses—even if they are clearly the result of your broker’s negligence.

3. Calculating the Damages You Are Entitled to Recover

When you have a claim for broker negligence, it is absolutely critical to ensure that you seek the full damages to which you are legally entitled. You only get one chance to assert your legal rights in FINRA arbitration. Your attorney can calculate your damages for you (which may include loss of principal, trading losses, legal fees and arbitration costs) and then fight to recover them as efficiently as possible.

4. Representing You in FINRA Arbitration

While FINRA arbitration is more straightforward and investor-friendly than filing a lawsuit in court, asserting your legal rights still requires experienced legal representation. Your broker negligence attorney at Zamansky LLC will represent you throughout the arbitration process—communicating with the arbitrator (or arbitrators) and your broker’s defense lawyers on your behalf.

5. Negotiating for a Settlement and Taking Your Arbitration Claim to a Hearing if Necessary

Many FINRA arbitration cases are resolved via settlement. If settling is in your best interests (as will often be the case), your attorney can negotiate for a favorable settlement on your behalf. Your attorney can then help you make an informed decision about whether to accept any settlement offer that may be on the table. If it isn’t in your best interests to settle, then your attorney can argue your claim at the FINRA arbitration hearing.

Contact A Broker Negligence Attorney for Help Recovering Losses

Zamansky LLC regularly represents investors who have sustained losses because of their brokers’ breach of fiduciary duty, fraud or negligence in conducting junk bond transactions. Our law firm aggressively pursues recovery from brokers and brokerage firms. Your claims evaluation is risk-free and confidential and our lawyers respond to all inquiries within 24 hours.