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What Does a Securities Attorney Do?

What Does a Securities Attorney Do? Featured by top securities fraud attorneys, the White Law Group

Securities Attorney to Recover Investment Losses  

Investors may lose money due to broker negligence or investment fraud. A securities attorney is a lawyer that specializes in the complex laws and regulations that apply to financial investments. They represent investors in claims against brokers, financial advisors, and brokerage firms to recover financial losses from wrongdoing. 

Brokers, financial advisors, and analysts may commit investment or securities fraud in an effort to control the market, gain business, or maximize commissions. The following activities could lead you to hiring a securities attorney: 

  • Offering separate clients contradicting advice.
  • Advising clients to continue an imprudent risk.
  • Advising out of a conflict of interest (including because the advice is motivated by profit).
  • Giving unfounded advice.
  • Giving biased investment advice. 

What are Securities?

Securities are financial contracts, such as units, shares or bonds, that give the owner a stake in an asset. They give certain rights to the owner; and in the case of stocks and bonds, they can be traded in the financial markets. Alternative investments are more complex and typically come with more risks since they not trading on a public exchange. 

Types of Alternative Investments: 

Non-traded Real Estate Investment Trusts (REITs)
Non-traded Business Development Company (BDCs) 
Regulation D Private Placement Investments 

The securities attorneys at the White Law Group have represented numerous investors in claims against their brokerage firms for alternative investment losses.  

Alternative investments such as non-traded REITs or BDCs do not trade on a national securities exchange, and are therefore illiquid products that can be difficult to sell. Investors can typically only sell their shares through redemption with the issuer, or through a fragmented and illiquid secondary market.     

Usually, these investments come with high up-front commissions and fees –sometimes as high as 10% — which goes to the broker, the broker-dealer, and the wholesale broker or manager. This may offer an incentive for brokers to sell this type of investment, despite the risks to their clients.  See:

The Trouble with Private Placements Under Regulation D

Securities Laws – Federal Securities Act and the Securities and Exchange Commission 

The Securities Act of 1933, or Federal Securities Act, established laws against misrepresentation and fraudulent activities in the securities markets. It requires publicly owned companies to disclose information to the public, so that investors can make informed decisions about a stock. The Securities Act of 1934 granted the SEC the authority to regulate all aspects of the securities industry.  

What is FINRA?  

You may have heard the term “FINRA.” The Financial Industry Regulatory Authority (FINRA), overseen by the SEC, provides regulatory services to the financial industry by licensing and regulating broker-dealers.  FINRA also operates the largest dispute resolution forum in the securities industry.  FINRA Dispute Resolution is the forum for almost all disputes between investors, brokerage firms and brokers.     

FINRA Arbitration & Mediation – Securities Attorneys    

Investors can file an arbitration claim or request mediation through FINRA when they have a dispute involving the business conduct of a brokerage firm or one of its brokers. Dispute Resolution is not the same as filing an investor complaint.    

If you are looking to recover damages, filing a FINRA arbitration or mediation case with a securities attorney offers you a way to seek damages. Investors are not limited to one or the other option, you can file an investor complaint and file for arbitration.    

Common Types of Securities Fraud 

Broker Misrepresentation  

Sometimes a customer will complain that the broker said that something was a very safe investment but the customer later discovered that in fact it was very risky. Customers rely upon the recommendations of stockbrokers, and failure to properly disclose the risk is a misrepresentation or material omission. Unfortunately, many investors do not discover the truth in such cases until after they have incurred substantial losses and then realize that the investment was not so safe in the first place.  

Churning or Excessive Trading   

If a broker is constantly buying and selling in the account, this may be evidence of churning, which means engaging in excessive trading in order to generate commissions for the broker. This practice is illegal.    

Unsuitable Investments  

An unsuitable investment is when an investment does not meet the objectives and means of an investor. The investment strategy may also be unsuitable. Brokers and financial advisors are required to due diligence on a investment before recommending it to their clients.

Unauthorized Trading  

Sometimes a customer may be surprised to discover certain trades made in his account which had not been previously discussed by the stockbroker. This constitutes unauthorized trading, which is prohibited. 

 “Selling Away”  

Selling away is when a broker or financial advisor solicits you to purchase securities not held or offered by the brokerage firm. As a general rule, such activities are a violation of securities regulations. Typically, when a broker is “selling away,” the investments are in the form of private placements or other non-public investments, and often these are investments that the broker has some pecuniary interest in. Such an investment is generally a violation of securities rules because the brokerage firm has not researched the risks of the investment or approved the investment for sale to its clients, and the broker is selling the investment without the knowledge of his employer.

How do you know if you need a securities attorney? 

You may need to call a securities attorney, if you see the following warning signs: 

  • Your broker fails to disclose important information regarding an investment purchase.  
  • Your broker fails to return your calls. 
  • You don’t understand the transactions on your statements. 
  • Your broker begins trading in high risk and speculative investments. 
  • You are paying capital gains taxes when your account value is decreasing. 
  • You find transactions on your account statements that you did not previously authorize. 
  • As a guideline, if you are retired and have lost more than 15% of your account in a single year or have suffered large losses in a single security, you should have someone review your account to determine if the investments selected by your financial professional are in keeping with your investment objectives. 

Hiring a Securities Attorney 

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.   

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.    

With over 40 years of securities law experience, including experience working at FINRA and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.    

Although our offices are in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. 

If you have questions about investments you made with a financial advisor, the securities attorneys of The White Law Group may be able to help.  For a free consultation, call the firm’s office at 888-637-5510.  

For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com. 

Tags: , , , , , , , , Last modified: February 9, 2023