Although most brokerage firms deny that they owe their customers any fiduciary duties, stockbrokers and investment professionals in most jurisdictions owe their clients the highest fiduciary duties, including the duty to act in the customer’s best interest and not to engage in self-dealing or conduct that is designed to benefit the stockbroker at the expense of the client. The stockbroker has a duty to place the client’s interests above the interests of the stockbroker or the stockbroker’s employer.
The federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects or special information in possession of a broker or the securities brokerage firm.
Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. A statement is material if it assumes actual significance in the deliberations of a reasonable investor. If a securities broker touts a particular security and makes a misstatement concerning an important contact with a company and a potential business prospect, or an upcoming earnings, or other announcement, which the broker either knows to be false or makes with a reckless disregard for the truth, these are misstatements.
Omissions, include, most often the failure to disclose compensation for the broker and his or her brokerage firm based the sale of a particular, often proprietary product, firm underwriting, or mark-ups or trading profits resulting from the recommendation and sale of securities held in inventory or in which the firm makes a market.
There are other forms of stockbroker misconduct, which are actionable under the law. These include claims against stockbrokers for failure to conduct due diligence, lack of product knowledge or reasonable basis suitability, negligence, self-dealing, fraud, excessive activity, unauthorized trading, and the sale of unsuitable or defective investments.
Stockbrokers and investment professionals owe their clients certain fiduciary duties, most of which are apparent and obvious, including the duty not to lie, steal or cheat, or to place their interests or those of their employers ahead of the your financial interests.
Specifically, the federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects, or to guaranty against losses.
Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. Omissions include such things as the broker’s failure to disclose that they are receiving more compensation from the sale of a particular security than another security, or the failure to disclose that the broker or brokerage firm failed to conduct any meaningful due diligence with respect to the recommendation to purchase a particular security.
A statement is material if it assumes actual significance in the deliberations of a reasonable investor.
There are other forms of stockbroker misconduct, which are actionable under the law including the federal securities laws, including claims for the sale of overly risky or otherwise unsuitable securities, breach of fiduciary duty, fraud in connection with the sale of mutual funds or structured products, the sale of unregistered securities, and variable annuity fraud.
Brokerage firms are also responsible for the misconduct of their agents under the common law, as control persons under the federal securities laws and based upon the failure to supervise the conduct and activities of the stockbroker, which for a variety of reasons, may have been intentionally ignored.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com.
OUR PRACTICE AREAS
The litigation of individual and group investor claims against securities broker-dealers and investment professionals adjuducated in arbitration before the Financial Industry Regulatory Authority.
Defective Financial Products
Alternative Investments, Promissory Notes, Structured Products, High Yield Bond Funds, Non-Marketable Real Estate Investment Trusts, Inverse and Leveraged ETFs, the Failure to Conduct Due Diligence.
Speculative or High Risk Investment Recommendations, Unsuitable Investment Strategies, Low Priced Securities, Customer Specific Unsuitability, Inappropriate Investment Recommendations.
Breach of Fiduciary Duty, Churing, Unauthorized Trading, Fraud, Stockbroker Theft, Ponzi Schemes, the Sale of Unapprovied investments.
"First Name I Would Mention"
I had questions and sought a consultation regarding what I believed to have been inappropriate treatment by my brokerage firm. He took the time to give me a clear understanding of what was involved and clearly described next steps to resolve the matter. He did this in a concise, complete and friendly manner. Although in the scheme of things my matter was small. From what I have seen, if I ever had need of a securities lawyer or was asked to refer one to a friend, Nicholas would undoubtedly be the first name I would mention.Keith (Avvo)"Upstanding"
I had a problem with a dishonorable Financial Adviser! So I contacted Mr. Guiliano to see what I could do. Nick said I can't very well charge you for something you can do on your own! Then proceeded to tell me what to do. Because of the short amount of time and my untrustworthy financial adviser's not crossing tee's and dotting I's my life's savings is in the process of being transferred into 3 separate accounts. One's that will work best for me. Instead of one account that kept my money out of my reach! You will have a hard time finding a more upstanding Attorney then Mr. Guiliano!Walter (Avvo)"Successful in Achieving Results"
I was the one who contacted Nick through his website as my ex-wife had little or no knowledge of investments, and depended completely on the advice of the investment firm. Without specifics I can say that Nick (and his wife) were not only successful in achieving results in the case, but in the process were all that one could expect (and more) as shown in my overall ratings above. I would highly recommend him.Joe S. (Avvo)Excellent Attorney!
Nick represented my wife and I in a recent lawsuit. He was the best attorney we have ever used! Communication was great, he kept us updated regularly, he explained everything in great detail, gave us all our options, and most importantly we always felt he represented our best interest throughout the entire process. We would highly recommend Nick!Brian F. (Avvo)"One In A Million"
Nicholas is extremely knowledgeable regarding many facets of the sometimes complicated securities business. This comes from his first hand experience in the business prior to his decision to practice law. Nick is also very dedicated to staying abreast of the ever changing environment that is so prevalent in the investment world. Combine that with his drive and determination to get things done and you have one in a million!!!Anthony S. (Avvo)"Dependable and Accessible"
Philadelphia has lived up to it's reputation as having the best attorneys in the Country. I had been told I had a problem of having a Hedge Fund investment. He went to a lot of time and trouble to not take my case. What I really appreciate is his work ethic. He was very kind to me not only with the generosity of his time, but with his words of support. No civilian, like myself, wants a lawsuit but if I ever needed one, it is Mr, Guiliano who I would call upon to represent me. He is a good man.Kathleen (Avvo)"Absolutely Fantastic"
Nick represented me when a stock broker took advantage of the money I had in my portfolio. He did an unbelievable job because most people thought I did not have a leg to stand on. He really knows his field. I am really thankful that I met Nick because he did a phenomenal job. I would highly recommend him.Theresa S."Successful in Winning"
Nicholas Guiliano was successful in winning a case against one of the firms where I had invested. I had a safe investment until a young eager stock broker took over my account and slowly kept putting my money in risky stocks, all while I was on disability. Nick was able to get me a portion of my money back within 2 months. He always was available to speak, and very courteous. I am so grateful to have found Nick. Thank you Nick!Jill I. (Avvo)"Ability To Think Outside The Box"
Nick Guiliano came highly recommended to me and I was very fortunate that he agreed to take my case. His knowledge of the law and his ability to think outside the box amazed me more and more as my case progressed. His aggressive style and total dedication to me and my case gave me the confidence that we were going to prevail and we did. He is one of the few Attorneys that does not finish his work at end of the day. He was always thinking of ways to use his expertise and knowledge on my behalf. On a personal note, he is a very down to earth guy who makes you very comfortable and at ease. He gave me the ability to sleep at night knowing that my case was in his hands. I will always recommend him without any reservations. In my book he is “the Best”Jerry V. (Avvo)"His Ability And Advice Paid Off"
We called Mr. Guiliano after reading his article in Forbes magazine. Although we though the statue of limitations might have run out on our case, we were thrilled when he took our case. Against the odds, he was able to get a settlement for us. He kept us informed and advised us on the proper course of action. We always felt confident with his ability and advice and it paid off. Highly recommend.Cris (Avvo)"Recommend Him Strongly"
I used Mr. Guiliano for a investment fraud case and he did a very good job. I got a good deal of my money back that had been lost due to risky investments I was put into by a prominent company. It was not a really big case, yet Mr. Guiliano was interested and responsive and kept on top of things for me. I would recommend him strongly.Anne H. (Avvo)"Superb Representation"
Mr. Guiliano (Nicholas) represented my mother and I in an investment case where it appeared the agent was preying on elderly people and steering them to improper investments to reap commissions. Mr Guilano did an excellent job of preparing the case and representing us. Although the case settled out of court, it was the best outcome expected for several technical reasons out of his control. He always kept us informed and provided sound recommendations. I would not hesitate to recommend Mr. Guiliano for any investment related case.Bob W. (Avvo)"Somebody you want on your side"
Personable and professional, he is the one to go to when investors are defrauded by Brokerage houses and Investment banks. Somebody you want on your side when things go wrong. He takes personal interest in every case and tries his best. Although I could not recover all my losses due to Fed/SEC action which was beyond his control, I would give Mr. Guiliano full marks on every count. He even worked with my accountants to help me write off losses due to fraud.Ashok N. (Avvo)"More than most lawyers"
Mr. Guiliano is highly accomplished securities lawyer. He helped us secure a wonderful result in case where my husband and I lost almost all our lifesavings. He is also high compassionate, and did more than most lawyers have ever done for us, as he seems that he cares.Mary S. (Avvo)"Awesome Results"
I would like to take this opportunity to express my sincere congratulations for your awesome results. I want to acknowledge my appreciation and respect for their splendid professionalism and knowledge you have shown in handling the laws (previous and present), for arbitration over fraud litigations.Ben S. (Google Business)"Best Of The Best"
I have employed Nick Guiliano personally and on behalf of my clients in the past. Nick is absolutely the best securities lawyer in Philly if not the country. The best of the Best!Ken S. (Google Business)"Finest Litigation Attorneys"
I have been a Corporate Counsel for over 30 years having worked with Banks and large public companies. Nick is one of the finest litigation attorneys in the country.Anthony P. (Google Business)"Fights for his clients like a bull dog"
I contacted Nicholas Guiliano for my 90 year old mother, who lives in Oregon to assist her in recovering from an unscrupulous financial manager who talked her into investing in some very high risk and speculative securities to reap high commissions. Mr Guiliano worked very hard to recover what he could for my mother. He is the best and fights for his clients like a bull dog to uphold their rights and protect their interests. I highly recommend Mr Guiliano and his firm when it comes to securities issues.Robert (Google Business)"Man Of Integrity"
Nick is an incredibly decent Atty. He's a man of integrity, fairness, and honesty. You could see that it's wasn't just me who noticed, it was opposing counsel, at the end of the Zoom! I'm completely impressed with Nick and will keep him in my prayers. Thanks again!Paula (Martindale-Hubbell)"Very Good To Work With"
My case was taken on a contingency basis. Even though it lasted about two years, the Guiliano law firm kept in contact with me, continued to research the case and brought it to a successful conclusion. They were very supportive of me in my first such experience and were very good to work with.Nancy T. (Martindale-Hubbell)"We are so very grateful"
My husband and I were lucky to find Nick after losing a substantial amount of money due to poor investing from a prominent company. He made us feel at ease right away and was always accessible for questions and concerns. Nick and his team were wonderful with gathering up all the pertinent information needed for our case, constantly in contact with us, answering all of our questions, which helped to make the process a lot less stressful. We are so very grateful to have had The Guiliano Law Firm represent us and the fact that they did it on a contingency basis made it possible to follow through. If not for them, we would never have been able to pursue this, financially or emotionally.Stacey B. (Avvo)"Incredibly Resourceful"
Nick was incredibly resourceful and professional. His understanding of securities and investment fraud is unparalleled. He is indeed connected with all the powers to be , and is able to provide intellectual and cogent insights. He is tenacious in fighting for his clients, and will never relent. I was able to follow his recommendations and am glad I did.Mark C. (Avvo)
Frequently Asked Questions
Can I sue my stockbroker?
Yes, you can sue your stockbroker if you believe they have acted negligently or fraudulently. The most common type of claim against a stockbroker is for negligence, which occurs when a stockbroker fails to exercise reasonable care in handling a client’s account. This can include failing to follow instructions, making unauthorized trades, or providing inaccurate or incomplete information.
Investors may make claims against stockbrokers for various reasons, such as fraud, negligence, or breach of contract. Fraud claims may occur if the stockbroker makes false statements or omits important information in order to induce an investment. Negligence claims may occur if the stockbroker fails to exercise reasonable care in handling the investor’s account. Breach of contract claims may occur if the stockbroker fails to follow the terms of the agreement with the investor.
Another type of claim that can be made against a stockbroker is for fraud, which occurs when a stockbroker makes false statements or omits material facts in order to induce an investor to buy or sell securities. This can include insider trading, Ponzi schemes, or other forms of investment fraud.
If you decide to sue your stockbroker, it is important to consult with an attorney who is experienced in handling securities disputes. The attorney will be able to advise you on the strength of your case and the best course of action. In most cases, lawsuits are filed in state or federal court, but some disputes may be resolved through FINRA arbitration as well.
It’s also important to note that in order to sue your stockbroker, you’ll need to have a claim that has been established with a certain level of damages, besides if the dispute is still going on and the broker is still active, it’s probably best to file a complaint with the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) which are the regulatory bodies that oversee securities firms and brokers.
What is the difference between a stockbroker and an investment advisor?
A stockbroker is a licensed professional who buys and sells securities on behalf of their clients. They typically work for a brokerage firm and are paid a commission for their services. An investment advisor, on the other hand, is a professional who provides financial advice and manages the assets of their clients. They may charge a fee for their services, which is typically a percentage of the assets they manage. The main difference between the two is that a stockbroker primarily executes trades, while an investment advisor provides advice and manages investments. A stockbroker may also be dually registered as an investment advisor.
What duty do stockbrokers owe investors?
Stockbrokers owe several duties to their investors, including the duty of care and the duty of loyalty.
Duty of Care: Stockbrokers owe their investors a duty of care to conduct their business in a manner that is reasonable and prudent under the circumstances. This means that they must exercise reasonable care, skill, and judgment in executing trades and providing investment advice. This includes the duty to conduct adequate due diligence on any investment before recommending it to a client.
Duty of Loyalty: Stockbrokers also owe a duty of loyalty to their clients. This means that they must put their clients’ interests ahead of their own and disclose any conflicts of interest. This duty extends to a requirement that the broker not engage in insider trading or other forms of self-dealing at the expense of the client.
Suitability: Stockbrokers must also make sure that any investment recommended to a client is suitable for that client’s needs, objectives, and financial situation. This means that the broker should take into account the client’s age, risk tolerance, investment experience, and other factors when making investment recommendations.
Fair Dealing: Stockbrokers also have a duty to deal fairly with their clients. This means that they must not engage in fraud, misrepresentation, or other deceptive practices.
Compliance with laws and regulations: Stockbrokers must comply with all laws, rules and regulations that apply to the securities industry. They must also have a good understanding of the products they are selling and the risks involved.
Violation of any of these duties can lead to disciplinary action by regulatory bodies such as FINRA and SEC and may also give rise to civil liability in the form of arbitration or litigation.
What to do if my stockbroker lies to me?
If you suspect that your stockbroker has lied to you, you should take the following steps:
Gather all relevant documentation: This includes any statements, emails, or other communications you have received from your stockbroker regarding the investment in question.
Contact your stockbroker: Speak with your stockbroker and request an explanation of their actions. If they continue to provide false information, document the conversation and the information provided.
Contact a securities attorney: If you believe that you have suffered financial losses as a result of your stockbroker’s actions, you should contact a securities attorney who can advise you on the strength of your case and the best course of action.
Consult with a financial advisor: If you are uncertain about your investments or financial situation, it’s a good idea to consult with a financial advisor. They can help you understand the risks of your current investments, as well as provide you with information about other investment opportunities.
It’s important to understand that stockbrokers have a fiduciary duty to their clients, which means they have a legal obligation to act in their clients’ best interests. Lying to clients is a violation of this duty and can result in serious consequences for the stockbroker and the brokerage firm.
Additionally, it’s important to note that you should not make any further investments or trades before consulting with a lawyer or financial advisor. Depending on the circumstances, your broker may have an ongoing duty to disclose material information about the investments and your broker may be liable for any losses that you incur as a result of their actions.
What is unsuitable investment advice?
Unsuitable investment advice refers to recommendations made by a stockbroker or financial advisor that are not appropriate for a client’s investment needs, goals, or risk tolerance. This can occur when a broker or advisor fails to conduct a proper evaluation of the client’s financial situation or makes recommendations that are not aligned with the client’s investment objectives.
For example, an advisor may recommend high-risk investments to a conservative investor who has stated they only want low-risk investments. Or, an advisor may recommend an investment that is not suitable for the client’s age, income, or net worth.
In general, the investment advisor or stockbroker has a legal and ethical duty to conduct a reasonable investigation of the investment product and to determine whether the investment product is suitable for the particular customer. If a stockbroker or an investment advisor recommends an investment that is not suitable for a client, the investment advisor or stockbroker may be liable for losses suffered by the client.
If a client suspects that they have been given unsuitable investment advice, they should:
Document the advice and any associated losses.
Consult with an attorney experienced in securities law to discuss their legal options.
It’s important to note that securities laws and regulations are complex, and it’s best to consult with an attorney who can advise you on the strength of your case and the best course of action.
Who is responsible for my stockbroker’s conduct?
A brokerage firm can be held responsible for the conduct of its stockbrokers if it is found to have failed to properly supervise the stockbroker or if it is found to have contributed to the stockbroker’s misconduct.
FINRA rules require brokerage firms to have policies and procedures in place to supervise their registered representatives and to ensure that they comply with all securities laws and regulations. This includes regular reviews of trading activity, customer complaints, and other red flags that may indicate misconduct.
If a brokerage firm fails to properly supervise a stockbroker and the stockbroker engages in misconduct, the brokerage firm can be held liable for the stockbroker’s actions. This includes liability for damages incurred by investors as a result of the stockbroker’s misconduct, as well as any fines or penalties imposed by regulatory authorities.
Additionally, if the brokerage firm had knowledge of the stockbroker’s misconduct and failed to take action to prevent it, the firm can be held liable for the stockbroker’s actions.
It’s important to note that, in most cases, the brokerage firm has a special relationship with the stockbroker and is responsible for the stockbroker’s conduct, this responsibility is called vicarious liability.
In cases of fraud or misconduct, it’s usually best to file a complaint with the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) which are the regulatory bodies that oversee securities firms and brokers.
What is “selling away”?
“Selling away” refers to the illegal practice of a stockbroker or financial advisor recommending and selling securities to clients that are not offered or approved by their brokerage firm. This means that the broker is selling securities that are not on the firm’s list of approved products and not being monitored by the firm. This is a violation of FINRA rules and regulations, and can lead to serious consequences for both the broker and the brokerage firm.
Selling away can occur in a number of ways, such as:
A broker recommending and selling a private placement to a client without the firm’s knowledge or approval.
A broker promoting a start-up company or other unregistered securities to clients.
A broker recommending and selling real estate investments or other non-securities products to clients.
Selling away can be difficult for clients to detect, as the broker may not disclose that the securities are not being offered or approved by the firm. Additionally, the broker may use high-pressure tactics and make false or misleading statements to persuade clients to invest.
If a client suspects that their broker may have engaged in selling away, they should contact their brokerage firm and file a complaint with FINRA. They should also consider consulting with a securities attorney to discuss their legal options.
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