After being admitted to the bar, David obtained his Series 7, 63, 65 and New York life and health licenses in the retail brokerage industry where he was a financial consultant with Merrill Lynch and Dreyfus. His experience as a financial professional provides him with extensive insight into the securities industry, making him well versed in all aspects of retail account management and an array of financial tools and their proper deployment by investment professionals.
Below are some of the most common claim types for consumers in FINRA arbitrations. Every case is different and the list below should not be considered the only reasons why cases are brought in arbitration.
FINRA rules require that your broker must have a reasonable basis to believe that a transaction or investment strategy that your broker recommends is suitable for you. Sometimes called “Know Your Customer” rules, your broker must know the particulars of your finances. Using industry knowledge and litigation experience we can help determine if you were victimized by unsuitable investments.
Churning occurs when a broker buys and sells securities in an account mainly for the purpose of generating commissions that benefit the broker. It may not matter if the trades are profitable for you if they were undertaken for the purpose of generating commissions. We can help evaluate whether you were a victim of account churning and what amount of damages you suffered as a result.
Unauthorized trading is trading in an account where the account holder was not consulted prior to trades being placed. If your broker made trades without your permission you are a victim of unauthorized trading.
Mutual Fund Abuses
It is widely understood that mutual funds are not suitable for use as short term trading vehicles but that may not stop an unscrupulous broker. Sometimes a mutual fund held for several years can be the subject of abuse because of back-end loads — fees charged where mutual fund shares are sold before they have been held for a certain length of time. Other abuses can come from failing to advise a customer about breakpoints for certain dollar amounts of investment transactions. If any of these things happened to you, you may be able to recover from the broker or his firm.
Over-concentration is a variety of suitability violation where a broker puts all, or at least too many of your “eggs in one basket.” The over-concentration can be in one security or even in one industry or sector. Because a well accepted principal of portfolio management includes diversification, a broker who over-concentrates an account is also failing to diversify that account. Over-concentration can also lead to excessive losses. We can evaluate your portfolio to see if your losses are the result of over-concentration.
In addition to the other wrongs listed here, a broker might be guilty of account mismanagement. Account mismanagement may occur in a variety of ways — for instance, failures to execute purchase or sales orders. If you have account losses let us evaluate your case to see if we can help you.
Hedge Fund Losses
Hedge funds are generally investment vehicles for highly sophisticated investors. Hedge funds usually charge large fees and can generate superior returns as well as massive losses. Generally, investors in hedge funds are limited partners in n limited liability company that is governed by its operating agreement. If the fund violates its operating agreement and losses result there may be a claim against the fund’s management. Additionally, if the fund manager commits fraud, even the limited liability structure may not insulate the fund manager from liability. Let our firm evaluate the documents from your account to see if the hedge fund and its investments were handled properly.
Fraudulent Investment Schemes
Besides the fake account statements and false reports that have been well publicized in the Madoff case, there are lots of other scams that have been tried over the years, including non-existent investments, and false reporting of position sizes or of execution prices.
David has successfully defended small and medium sized broker-dealers from investors who were trying to use arbitration as an insurance program for losses.
David has successfully helped brokers defend themselves where their employers improperly seek to recover money on Promissory Notes.
Contact Us Today!
Have questions about securities arbitration? Lawyer David Kasell can explain how the law applies and what you can do. In a successful consumer rights case, the vast majority of the attorney’s fees are borne by the defense.
For more information or to schedule a consultation, please email me at David@KasellLawFirm.com or call (718) 404-6668. I look forward to working with you!