Strong Representation by Sacramento Investment Attorneys
Holding investment professionals accountable when their negligence harms California investors
Investors are wise to solicit the guidance of brokers, advisors, and investment firms to maximize the potential of their investments. However, when these professionals are negligent in the services provided, either intentionally or unintentionally, great harm can result. When investment issues occur due to broker negligence, The Frankowski Firm is prepared to represent your interests. Our Sacramento investment negligence attorneys have years of experience in pursuing justice on behalf of investors who have been wronged by incompetent or negligent brokers and financial advisors.
What investment issues are considered misconduct?
Investment issue claims can arise from a number of circumstances. Often, brokers will recommend an investment that may not be in the investor’s best interest, but that will result in the broker receiving some kind of compensation or kickback.
Our California investment fraud attorneys are well versed in a variety of investment-related claims, including:
- Mutual funds. These are publicly traded investments that are managed by registered investment advisors and regulated by the SEC. Mutual funds have many advantages, including diversification and professional management. However, the mutual fund, like any investment, has to be the right fit for the investor. It is the responsibility of the broker to make that assessment and advise their client appropriately.
- Variable annuities. Variable annuity investments often cause more harm than good to the investor and his/her beneficiaries. Financial advisors rely on scare tactics to promote these investments, frequently preying on seniors by convincing them that the variable annuity will protect their existing investments.
- Penny stocks. Because of their low value and potential lack of liquidity, penny stocks are viewed as high-risk investments. It is the responsibility of the broker to communicate these risks as per SEC regulations. Lack of transparency on the part of the broker is considered negligence.
- Buying on margin. Investors are required to pay at least 50% of a security’s purchase price upfront. The remaining cost can be borrowed from the broker or another lending institution. This practice can multiply gains, but it can also multiply losses just as readily. While such an option may be attractive, brokers must be upfront with their clients about these risks.
- Closed end funds (CEF). These investments differ from the more prevalent open-end funds in that there are a limited number of shares available in a CEF. The performance of CEFs tends to be more volatile, and they require active management. Often, brokers receive a commission for CEFs and will try to push an investor toward them. However, CEFs are only advisable in very specific circumstances.
- Private placement investments. These investments are typically high risk and, like CEFs, are only advisable for a small number of investors, despite their potential for large returns. Because they are not registered with the SEC, little information about them is available to the public. Master limited partnerships (MLPs) in the energy and natural resource sector, and Real Estate Investment Trusts (REITs) are common private placement investments.
- REITs. While real estate itself is usually a sound investment, Real Estate Investment Trusts typically do not reveal past performance, fees, taxations schedules, and redemption restrictions. Because investors may not fully understand what kind of product an REIT is, nor what kind of risks it poses, they may sustain significant financial losses.
- Master limited partnerships. These gas and oil infrastructure investments are sometimes touted as being successful based on historical performance. The wise investor knows that not only is previous success no predictor of future return, the US energy industry is on unstable ground.
These are just a few of the many ways in which financial advisors can be negligent in their duty to their clients. When a broker or advisor fails to adhere to best practices or allows personal interests to influence the recommendations made to a client, negligence can be at play.
Let an experienced Sacramento investment negligence attorney obtain justice for you
When an advisor, broker, or investment firm neglects their clients’ best interests, it is essential that the wrongdoers be held accountable. This is not only to obtain the financial compensation owed to the investor, but to ensure future investors do not succumb to the same treatment. If you have been the victim of negligence on the part of a financial planning professional, a Sacramento investment negligence attorney at The Frankowski Firm is ready to fight for you. Phone our office at 888.741.7503 or use our contact form to schedule an appointment to discuss your case.