Most Common Arbitration Claims

Claims by investors against stockbrokers, investment advisors, and financial planners often fall into certain well-recognized categories. The most common investor claims are:

  • Misrepresentations and omissions – the investment professional misrepresents or omits material facts necessary for the customer to make an informed investment decision.
  • Unsuitable investment recommendations – the investment professional makes decisions that are inconsistent with the customer’s financial needs, investment objectives, financial ability to incur the risk associated with a particular investment, or knowledge or understanding of the risk associated with a particular investment.
  • Over-Concentration – the investment professional concentrates a customer’s investments in one particular investment, type of investment, or industry sector, thereby failing to diversify the customer’s portfolio.
  • Excessive trading or “Churning” – the investment professional engages in frequent trading to generate commissions to the detriment of the customer.
  • Breach of fiduciary duty – the investment professional fails to act in the best interest of his/her customer, such as by failing to fully disclose all risks associated with the investments he/she is recommending.
  • Failure to execute trades – the investment professional fails to execute a customer order or fails to execute a customer order in a timely manner.
  • Unauthorized trading – the investment professional purchases or sells a security in a customer’s account without first obtaining permission.
  • Negligence – the investment professional falls to follow the standard of conduct established to protect investors against unreasonable risk of harm.
  • Breach of contract – the investment professional fails to comply with the terms of the brokerage agreement executed by the customer.
  • Margin account abuse – the investment professional trades on margin – with borrowed money from the brokerage firm or professional – without the customer’s knowledge or authorization, or without explaining the risks associated with margin trading.
  • Failure to supervise – the brokerage firm fails to supervise its brokers’ or investment professionals’ compliance with the securities laws and the rules and regulations of the securities industry.

To read more about these improper practices, click on the link of interest.

If you believe that you have been the victim of investment professional misconduct, it is important to talk with an attorney. The attorneys at Bernstein Liebhard LLP represent high net worth investors in arbitration proceedings across the country involving the types of misconduct that often fall into the foregoing categories.