Security and Investment Fraud Lawsuit and How Pittsburgh Security and Investment Fraud Lawyer Can Help
When you are investing in some financial institute and keeping your money, you assume complete safety of the money and also substantial growth for that too. You also deserve to know all the necessary information regarding your money and investment and the future of it. At times, you trust such fraudulent stockbrokers and advisors of investment and banking, and they take advantage of your trust. As a result, you lose your money. There might be many reasons that contribute to the loss of your money, like unsuited financial advice, conflicts of interest, fraud, and so on. But in the end, you lose your hard-earned money or your retirement income. If you are in a situation like this, where you or your loved one has lost money due to security and investment fraud, an experienced Pittsburgh security and investment fraud lawyer will be able to help you out effectively.
At Logue Law Group, we have years of experience and expertise in handling cases regarding fraud in investment and banking. Our Pittsburgh injury lawyer will be able to help you get through your loss by recovering the money that you lost.
Different Types of Security and Investment Fraud
There can be various types of investment and broker misconduct that can lead to fraud and losing all your money. In the following points, we are going to tell you about some of the types of investment frauds.
Bonds are debts that are sold on behalf of the companies or government to raise the capital of the investor. Generally, financial advisors and brokers help you understand the terms and clause of this investment as the safe one for your fixed-income investment. But if it is a fraud, it can cost you all your savings and retirement income as it has happened for many during the recession before. When fixed income investments are supposed to be the cornerstone to diversify your portfolio, these frauds can strip you of your money.
Breach of Fiduciary Duty
A broker is supposed to be the bridge between the buyer and the seller. They are not supposed to be bereft of personal interest and are trusted with negotiating the contracts where they are not the stakeholders. There are many categories of brokers like real estate brokers, commodity brokers, security brokers, insurance brokers, and mortgage brokers. They must adhere to the laws to help the parties make the right decision. If the broker is found to be neglecting his or her fiduciary duties, they are becoming the fraud. Our Pittsburgh security and investment fraud lawyer can act against them to recover the amount you have lost.
Churning and Excessive Trading
When your broker is insisting on churning in excessive trading in the stock exchange, and that is already risking your security account, then they are working against your financial benefits. This is considered to be a fraudulent activity too.
Failure to Supervise the Account
Every investment firm and organization has a policy for establishing and maintaining rules and regulations for the supervision of their registered financial advisors and brokers. The brokers are responsible for regularly reviewing your portfolio and ensuring that the trading meets your objective of investment as well as risk tolerance. If your money in the investment is lost due to the negligence of your broker, then it is considered as a fraud.
Investment Fraud and Misconduct
Often the brokers put their own interests before the interest of their clients. As a result, investors lose their money. Such fraudulent schemes can include the followings:
- Non traded real estate investment trust
- High-risk junk bonds
- Ponzi schemes for high returns
- Structured notes as hybrid security products
- Variable annuities that are not suitable for elderly investors or retired people
For margin trading, the fraudulent financial advisor might suggest the investor to purchase stocks with the borrowed money from another broker-dealer using security that is invested as collateral. Margin trading is a high-risk strategy that will generate commission for the broker even without an up-front additional investment for the customers.
Omissions or Misrepresentation by the Broker
The financial broker is supposed to take care of explaining the terms and clauses of each contract and investment and the disclosure of all the risks that can be there. However, if the broker fails to inform the investor about the risks, and as a result, the investor loses their money, it can be considered as a fraudulent activity. Our Pittsburgh injury lawyer has dealt with many cases including these examples.
Overconcentration of Assets
An investor puts the money into different assets and diversifies the funds in order to minimize the risks while getting returns from different sources. Brokers are responsible to make the decisions on behalf of the investors, keeping the necessary information in mind like the age, risk tolerance, and financial status of the investor. If they ignore this and that results in overconcentration of the assets, then it can be considered as a fraudulent activity.
In the time of market crisis, preferred security works as common stock than the income of the investor. As a result, unlike common stocks, these stocks miss on the upward price appreciations. However, they are exposed to the risk of a downward decline. Finally, they fail to generate the value they are supposed to do.
A REIT is a company that has its assets and investments tied up with a real estate project and also distributes 90% of the returns to the shareholders yearly as dividends. Investors buy a portfolio of the property that generally an individual won’t invest in. Investors depend on the sale of the properties to get the returns. In this case, if they don’t get the amount they were promised due to the negligence of the broker, a Pittsburgh security and investment fraud lawyer can help you file a claim to recover your money.
If the broker is selling away the stock or soliciting the sale of the private securities that they are not approved of by the financial organization they work with, then it is a fraud. And for that, the organization as well as the investor can hold them liable.
This is a common type of investment fraud where the broker uses the non-discretionary investment account with the proper permission of the investors for any transaction. This might involve other types of fraudulent activity like churning too to get a higher level of commission for the broker. This can cost the investor as well.
Variable Annuity Issues
Even though investment advisors often present this as a good plan for the retirement investment, yet in involves high risks for the elderly investors because of the high annual costs that can exceed 3% and high penalties if the investor liquidates.