Well, for investors it could be any number of things. It could be the sale of unsuitable investments. The investor was looking for something that was more safe and secure, or something for retirement, and what they got was actually something that was very high risk. That would be one type of case. Another type of case would be a churning case. Churning means that the broker was trading the account with the intent of making money for himself through commissions, and without regard for the customer’s best interest. So those are the type of cases that we would typically see and pursue in a securities arbitration.
Do you only represent clients who reside in Minnesota?
I’m only licensed to practice law in Minnesota. But the interesting thing about arbitration is, in some states, I can represent investors in that state even though I’m not part of the [state] bar. What I suggest to people is, go ahead and contact me if you have an issue that you want to discuss. The first thing I’m going to ask is, “Where are you?” And I’m going to figure out, under the rules of that jurisdiction, can I represent you? If I can, obviously, I’ll go forward and do what I can to help them with their case. If I can’t, I know a lot of attorneys who do this kind of work across the country and I’m always happy to refer those customers to somebody who I know can help them.
Are there ever occasions when you represent stockbrokers or investment advisors?
Yes, there are. I used to represent an even number of investment firms and brokers [on the one hand] and customers on the other hand. Now, I’m only representing customers. I will represent individual stockbrokers and investment advisors in disputes with their own investment firms. For example, sometimes if brokers are terminated improperly, they may be defamed by their investment firm. I will represent brokers and advisors in those situations against their employers. Now, I’m not going to represent individual advisors and brokers in disputes with their customers because I’m squarely on the side of customers.
Suing Brokers/Advisors and Investment Firms
Investment fraud may take many forms, including:
Misrepresentations or omissions concerning investments
Violation of federal and/or state securities anti-fraud statutes
Sale of investments away from the investment firm, i.e., “Selling Away”
“Churning,” i.e., excessive trading in a customer account for the primary purpose of generating commissions for the broker/advisor
Sale of unsuitable investments, including inappropriate use of “margin” trading
Breach of fiduciary duty, broker/advisor negligence, and failure to supervise
Failure to adequately diversify investments in a portfolio, or over-concentration in particular investment(s)
Violation of consumer fraud statutes, consumer protection laws, and other laws protecting the elderly and vulnerable/disabled persons with respect to investing
Such broker/advisor misconduct might occur in connection with many different investment types, including:
Equity securities, i.e., common stock and preferred stock
Municipal bonds, corporate bonds, junk bonds, and bond funds
Variable annuities, indexed annuities, fixed annuities, and L shares
Mutual funds, hedge funds, and Exchange Traded Funds (ETFs)
Oil & Gas and other energy-related programs
Real Estate Investment Trusts (REITs), Real Estate Limited Partnerships, Unit Investment Trusts (UITs), and other alternative investments
Private placements of securities, bridge loans, and promissory notes
Initial Public Offerings (IPOs), secondary public offerings, and Private Investment in Public Equity (PIPEs)
Initial Coin Offerings (“ICOs”), cryptocurrencies, and crowdfunding ventures
It is important to note that not every investment loss is the result of fraud. Investing, by definition, has inherent risks. An investor may lose money even if the investment firm acted legally and appropriately. We will not seek to recover your ordinary market losses. Rather, it is our mission to correct unlawful conduct and injustice when it arises.