Securities Fraud Attorneys
& Stockbroker Fraud Attorneys

Serving Los Angeles, San Diego,
and the Southern California Areas

Act Now!

Stockholders Suits: Did you lose money in the stock & bond market during the past few years? Did you buy AT&T, WorldCom, or other telecommunications bonds from Salomon Smith Barney? You may be able to recover those losses. More info

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The federal and state securities laws, which govern the conduct of public companies and stockbrokers, prohibit stock brokers and others in the securities industry including investment banks, brokerage firms, brokers, and dealers from making false or misleading statements, omitting facts, or engaging in “fraudulent or manipulative acts and practices, in connection with the purchase or sale of securities.”

Recently, several major stock brokerage firms (including Merrill Lynch and Salomon Smith Barney) have been accused of issuing inaccurate stock reports and selling overvalued stock to their clients. Examples of companies that have been hyped and sold to investors include WorldCom and Enron as well as many others.

If you have suffered a financial loss as a result of stockbroker fraud (including misleading statements and representations by a stockbroker), whether or not the stockbroker is based in California, please call or e-mail our Securities Fraud Attorneys in Southern California today. You may have a claim against your stockbroker and we may be able to help you recover some or all of your financial loss.

Following are a few examples of the types of claims that may result in stockbroker liability:

Telecommunications Bonds

If you bought AT&T, WorldCom or other telecommunication bonds from Salomon Smith Barney, and lost money, you may be able to get your money back because you may have been the victim of a massive fraud. E-mail or call Jacoby & Meyers now for more information.

Unsuitability

This is perhaps the most common of investor claims. It arises out of Rule 405 of the New York Stock Exchange, the so-called “Know Your Customer” Rule. Before making investment recommendations, stockbrokers have an obligation to attempt to learn from the customer accurate information about the customer’s level of investment sophistication, experience, objectives, net worth, and financial needs. Based upon that information, a broker has an obligation to make only those investment recommendations that are in line with or “suitable” for that particular customer. If a broker makes unsuitable recommendations, the customer may have a valid claim.

Misrepresentations & Omissions

Sellers of securities have strict obligations to provide accurate information about the investments they sell. Federal and state securities laws prohibit salespersons from making any “material misrepresentation” about investments that they are selling. Further, the laws impose an obligation not to omit any information that a reasonable investor would want to know about making a decision to invest. If a broker incorrectly represents that a customer should buy stock in a company because it is in merger negotiations with a Fortune 500 company, there may be a claim. Or, if a broker fails to mention that the company’s largest customer who represented 50% of its revenues has just left, there may be a claim.

Churning

These claims, also known as excessive trading, require a customer to prove that the stockbroker exercised actual control over the decision making in the account, the trading was excessive, and that the stockbroker acted in reckless disregard of the customer’s interests. Excessive trading is normally measured by cost equity or turnover ratios.

Breach of Fiduciary Duty

A fiduciary duty is an exceptionally high degree of care that the law imposes on certain relationships. Some common examples are therapist-patient, lawyer-client, and guardian-minor ward. The stockbroker-investor relationship can be a fiduciary relationship if the customer looks to the stockbroker for advice, the stockbroker is aware that the customer is depending on the broker, and accepts that responsibility. When a fiduciary relationship exists, a broker has the obligation to use the utmost duty of loyalty, good faith and care toward the customer.

Unauthorized trading

When stockbrokers make trades in a customer account without first obtaining the customer’s permission, and the broker has not been given discretion to make such trades, the trade is unauthorized.

Negligence

Negligence is the failure to live up to the minimum acceptable standard of care within a community or industry. There are many different types of claims for negligence. On-line trading firms can be negligent in their handling of electronic orders, trading desks can be negligent in the execution of trades, and stockbrokers can be negligent in the handling of the customers’ affairs.

Failure to supervise

Brokerages have specific and detailed obligations to supervise the activities of their brokers and their firm. Among other things, brokerages have an obligation to review every trade ticket that is submitted by the brokers in the firm. If a stockbroker’s client accounts show a pattern of excessive trading, or the sale of the same investments across the board to all types of clients, the firm has an obligation to investigate for abuse. The failure to do so can lead to liability.

If you feel a stockbroker misled you or in some way caused you financial harm whether or not you live or work in Los Angeles, San Diego or Southern California, call Jacoby & Meyers for an experienced stock or securities fraud lawyer at 1-888-JACOBY-1 or email us.

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