Logo of Heidgerd Law Office, LLP

Securities Claims: FINRA Arbitration, Broker Fraud, Unsuitable Investments, North Carolina Securities Act

Photo of Dick Heidgerd meeting with a female client to discuss a case.

There are numerous types of Securities Claims that we can bring on behalf of our clients. Some of the usual claims include:

Unsuitable Investment

We have found that the most common securities claim occurs when a client buys a recommended investment that is unsuitable. For example, the recommended investment may be too risky for the client’s age and other income. Or the investment may be highly speculative when the client needs all his investment income to pay for his daily needs. Or the investment may be too high a percentage of his total investments. It seems a common thread to an unsuitability claim is that the client could not afford to lose any value in the investment, and the broker knew it.

But, whether the recommended investment is unsuitable depends on all the circumstances of the investment and the individual client. Clearly an investment may be unsuitable for one client and suitable for another.

Investment Fraud

Another common securities claim occurs when a broker does not fully explain the risks and benefits of a recommended investment, or misrepresents the facts of the investment, or does not tell the client important information about the investment. The broker is required to give the client all material information about the investment so that the client can make a reasoned decision to buy the recommended investment. The broker is required also to disclose “all material information necessary to make the representations made not misleading.”

For example the investment may be fraudulent if the broker does not tell the client that the underlying financial documents of the investment are false. Or the broker does not tell the client that the underlying value of the investment is based on an improper appraisal. Or the broker does not tell the client that the investment’s business operation is failing. But he recommends the investment nevertheless. Or the broker tells the client something about the investment that is untrue.

In essence, a claim can be made if the client would not have bought the investment had he known of the true facts of the investment or had he known of all the facts of the investment.

Other Bad Investment Advice

A general common securities claim occurs when the broker fails to reasonably investigate an investment before he makes his recommendation. Or when a broker improperly over sells and buys in his client’s account, also known as churning, and thus creates fees for himself to the detriment of his client. When these types of things happen, the investments usually turn out to be unsuitable or otherwise improper. Whether the broker is negligent or intentionally misleading or deceptive when he or she fails to properly consider his or her recommendation is ultimately based on the facts of the investment and of the goals and the profile or each client.