Protecting Investors from Advisor Misconduct
Miami Litigation Attorney Matthew Seth Sarelson
Investors often place their trust in an investment advisor, relying on his or her knowledge, experience and honesty to steer their investments in a sound direction. Unfortunately, some advisors shirk their fiduciary duties, knowingly defrauding investors or failing to act in their best interests. When investors suffer harm due to a stockbroker or investment advisor’s misconduct, experienced securities litigation attorney, Matthew Seth Sarelson, P.A. will stand up for their rights and recovery. In fact, the firm’s work in the class action lawsuit against Paragon Properties of Costa Rica, a suit seeking recovery for over 300 investors, continues to set a new standard for the quality of work in complex investment fraud cases.
Churning and Misallocation of Funds
When an advisor makes unnecessary stock trades on an investor’s behalf to earn increased commissions, he or she has engaged in churning. Such trading may violate SEC regulations or other securities laws. Churning also occurs in the insurance industry, whereby an insurance agent advises a policyholder to drain one life insurance policy in order to fund a new one with the same insurer.
Advisors can also harm investors by misallocating funds, or investing the wrong percentage of an investor’s money in the wrong type of investment based on that investor’s financial condition and goals.
Investors who suspect their advisor may be churning or misallocating funds can speak to an aggressive Miami litigation attorney at our firm to learn about possible legal actions they may have available to them.
Nondisclosure of Risky Investments or Conflicts of Interests
Advisors have a duty to act in investors’ best interests, and that duty includes fully disclosing the risks of any investment the advisor recommends. An advisor might be liable for fraud if he or she tells an investor that a risky investment is safe. Advisors also have a duty to inform investors of any conflicts of interest, such as whether a recommended investment generates a higher commission for the advisor than similar investment options.
Violation of Fiduciary Duties
An advisor’s fiduciary duty obligates him or her to protect and maintain the interests of investors. Advisors violate that duty when they:
- Elevate their own interests above investors’ interests
- Fail to disclose that an investment is opposed to a client’s interests and fail to obtain the client’s permission to proceed
- Act as a dual agent without informing the clients involved
- Fail to adhere to professional standards or fail to provide the maximum level of protection to investors
Investors who believe a financial loss resulted from an advisor violating his or her fiduciary duties can learn about their legal rights from experienced Miami litigation lawyer Matthew Seth Sarelson, P.A..
Some advisors go so far as to willfully defraud investors, engaging in acts such as siphoning money from clients or running a Ponzi scheme. Large institutional investors and small individual investors alike must be vigilant in protecting their assets and identifying potential fraud, especially in South Florida, where Ponzi schemes persist. The Madoff fraud, the largest Ponzi scheme in history that cost investors $50 billion, hurt numerous investors in the Palm Beach County area.