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California Investment Negligence Attorneys Protect Your Interests

Helping investors in Sacramento, San Francisco, and Los Angeles seek justice and recover investment loss

Inexperienced investors place a great deal of trust in their brokers to give sound financial advice. But taking monetary suggestions on faith is not enough — investors need to be proactive about educating themselves about which investments are secure or safe and which are less likely to be appropriate for their desired level of risk.

When an investment professional abuses the trust and relationship with a client, The Frankowski Firm works for investors. Our California investment negligence attorneys work for you to achieve restitution when you’ve been wronged.

What does fraud and negligence look like?

Investment negligence sounds innocuous, like a mere error of calculation when tallying profits. However, the reality is that can be as harmful as outright fraud. Many of the potentially problematic investment options discussed below are precisely that; only “potentially” problematic. For a small percentage of investors, who have a high tolerance for risk and years of experience in the market, they may be suitable. They are not, however, recommended for the novice investor, or investors of any level of experience who are not comfortable potentially losing their entire investment.

Our California investment negligence lawyers are here to help our clients recoup losses after negligent brokers push inappropriate investments, such as:

  • Buying on margin. Buying on margin entails the investor taking a type of loan from the investment firm in order to pay for the venture. The concern then arises that the firm will make more money off the investor’s loss than his or her success, which presents a clear conflict of interests between giving sound advice to the client and making money for the firm.
  • Closed end funds. Closed end funds are managed, which some naive investors may believe will lead to some guaranteed profit. Unfortunately, there are no such assurances. What is assured is that these funds carry some of the highest fees and some of the least required disclosures of past performance, making them high-risk choices.
  • Master limited partnerships (MLPs). MLPs focus on energy and gas infrastructure and carry significant risks. Many brokers choose to push these investments due to the high commissions available, regardless of the suitability for an individual client’s needs.
  • Mutual funds. These investments are publicly traded, managed by registered advisors, and regulated, and are traditionally considered safe. They also offer portfolio diversification and professional oversight. They are not, however, ideal for every investor, depending on the level of risk-tolerance and preferred duration.
  • Penny stocks. As the name implies, penny stocks are low cost, but they are not low risk. Indeed, the only aspect of a penny-stock transaction that may legitimately considered low risk is if the investor invests only a small amount, which they consider negligible.
  • Private placement investments (PPIs). PPIs are long-term, low-liquidity investments not overseen by the Securities Exchange Commission (SEC). Inexperienced investors are less comfortable with making lengthy commitments to high-risk investments, particularly given the lack of requisite disclosures.
  • Real Estate Investment Trusts (REITs). REITs are considered unsuitable because of their lack of disclosure of risks, past profits, tax classification and penalties for early withdrawal. This lack of upfront knowledge has cost many unwary investors excessive fees and unexpected taxes, and led to little-to-no profit.
  • Variable annuities. Variable annuity investments have all the hallmarks of bad investments: high fees, few tax benefits and increased commissions payable to brokers before seeing any profits.

California investment fraud attorneys defend clients’ rights after negligent or incompetent brokers take advantage

This isn’t meant to be an exhaustive list of all the types of investments that might be unsuitable for inexperienced investors. Sadly, there are new ways of scamming investors being devised every day. If you or a loved one has been misled or duped by a Sacramento, San Francisco or Los Angeles investment broker or investment firm, call The Frankowski Firm at 888.741.7503 or fill out our contact form to discuss your legal options.

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