In the Classroom


Helpful Information

Brokers sometimes recommend a client use margin (borrowed money from the brokerage firm)in order to increase the amount of “Purchasing Power” that an account has. This, of course, allows the broker to sell the account more investments, thereby increasing the commissions. If margin is used to purchase municipal bonds, the income from which is typically tax-free, this can jeopardize the [...]

There are primarily four common cases against Investment Professionals.  These are as follows:  A.  Churning.  "Churning" or excessive trading recommended or done by a broker violates the law.  Most securities should be bought and held.  Bonds, in particular, are bought and held for the income that they pay.  Usually they are held until the bond matures.  However, with the bull [...]

The securities fraud and other laws have statutes of limitations that require investors to proceed promptly with legal action. However, “promptly” generally means that an investor should commence legal action within two to six years of realizing that they have lost money as a result of one of the kinds of securities fraud or negligence outlined above. Time restrictions for […]

Often elderly and infirm people are seen as “lambs to be slaughtered” by foxes in the securities business. Although they might not have been aware of the abuse, or are not now able to testify, their family or heirs can bring such claims on their behalf. Again, statutes of limitations are a factor to consider. Your best course of action […]

Most brokerage firms require its customers to sign an agreement when they open an account agreeing to take their disputes to arbitration. The Financial Industry Regulatory Authority, “FINRA” (formerly the NASD), runs the arbitration tribunal, and it schedules hearings in all major cities every month. Although some customers never signed such agreements, they are also able to file a securities […]

You may have a viable claim depending on the kinds of investments you were sold, documents available from the brokerage firm, and your financial situation when the investment was recommended to you. Brokerage firms are required to provide you with copies of all the documents you signed and all statements and confirmations for trades upon request. In order to expedite […]

If you believe that your broker or advisor has misled or defrauded you, it is important that you act promptly. Even if you have a good relationship with your broker and do not want to interfere with that, often the broker was simply providing information that he or she received from the firm’s research department. By law, brokerage firms are […]

Yes. FINRA rules allow a group of relatives, friends, members of the same congregation or any other group with a common complaint to bring one arbitration. These cases are especially powerful given the corroborating testimony of group members. Even if the group members were sold the same product by different brokers at the same firm, FINRA has allowed a single […]

Yes. The securities laws cover many kinds of investments: stocks, bonds, private placements, promissory notes, preferred securities, auction rate securities, collateralized debt obligations, collateralized mortgage obligations, unit investment trusts, mutual funds, ETF’s and money market funds. Under these laws, financial advisors and brokers have an obligation to disclose all material facts associated with bonds. If you believe that you have […]

Before hiring an investment professional, I advise all investors to examine the advisor’s background. Either your state securities commission or FINRA can provide an outline of the licensing exams a broker has passed, the existence of earlier complaints or arbitrations against the broker, and his or her employment history. You can also log onto the FINRA website and enter the […]

Broker/dealers, stockbrokers, investment advisor, planners and professional who sell stocks and bonds are all regulated by both state and federal governments.    In financial situations, a “broker” is a person or business that sells securities on behalf of others (“customers”).  A   “Dealer” is a person or business that sells securities for itself.  So, for example, when underwriting the  stock of an initial public offering (“an IPO”) a firm acts as a dealer.  When recommending that its customers purchase such  stock, the firm is operating as a broker.  Both activities are highly [...]