To determine whether a claim against a Financial Advisor is viable, an analysis of the investor profile is vital to see if there has been wrongdoing by the financial advisor.  Losses may be due to market risk that the customer willingly accepted.  Will Rogers supposedly said, “It’s easy to make money in the stock market; buy a stock when it’s down, and sell it when it goes up. And if it doesn’t go up, don’t buy it!”

We still get a chuckle from this because we all know that the market fluctuates in value.

The task before making a claim against a financial advisor, stockbroker, or brokerage firm is to determine which losses may have been due to market risk consistent with the customer’s investment objectives and risk tolerance, and which ones were caused by advisor or stockbroker negligence or wrongdoing.  For example, if the customer is a retiree, the primary investment objective should probably be preserving the capital that the customer has worked a lifetime to accumulate, and deriving an income from these investments. If the financial advisor has recommended the purchase of an investment that did not fit this profile, that recommendation may violate the industry’s “suitability” rule, which states “In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable ground for believing that the recommendation is suitable for such a customer.”

A financial advisor must also comply with the “know your customer” rule, which provides that an advisor must use due diligence to learn the essential facts relative to every customer, every order, every cash or margin account acceptable or carried by such organization.

If you find that a financial advisor has abused or breached the trust and confidence implicit in your business relationship, you may be entitled to arbitrate or mediate the dispute with your financial advisor or brokerage firm.  You may also want to call the FINRA Investor Hotline at 800-289-9999 to see whether your broker has been subject of other complaints.

For more information about how to recover your assets from investment fraud by a financial advisor or brokerage firm, contact Attorney Howard Rosenfield at 860-677-4334 or email  Attorney Rosenfield is also available to speak on specific topics related to investment fraud.