QUESTION
Are there any grounds to sue a New York broker firm for malicious incompetence causing total investment loss.
Asked on Apr 28th, 2014 on Securities Fraud - New York
More details to this question:
In 2008/09 I invested USD250k through National Securities broker. The global financial crisis caused some loss of of portfolio value understandibly reducing the value to around USD150-60k. Subsequently with the recovery in stock values the broker made a series of bad decisions, failed to monitor the investment and increased risk by using options and leverage. During a period of strong stock price growth continuing bad decisions and lack of oversight caused a total loss of investment to only some 2k by Q1 2014. If the funds had been invested in the index it would now be worth USD350-400k. My primary concern is the poor monitoring of the investment which has greatly multiplied the losses from the poor decisions. The broker has also profited substantially through brokerage fees exceeding USD100k over the 5-6 year period.
1 ANSWER
Whether or not you have any grounds to successfully sue National Securities or your broker is a question that can only be answered by doing a thorough review of the circumstances relating to you, your financial status , your financial objectives and the transactions in your account(s) and how they occurred. From the limited facts you have provided, I could only say that you may have a case and getting an informed opinion from a securities lawyer is worth doing. Some red flags that may indicate broker misconduct include:1)the broker made trades in your account without your permission or without first getting your written consent giving him "discretionary authority" to trade on your behalf; 2)The broker failed to accurately advise you of the risks that accompanied the trading; and 3) the trading was excessive in light of your investment objectives and occured principally to generate commissions and/or margin interest. A key question is how were the "bad decisions" made? Were you part of the decision-making process or just a bystander who was frequently assured that everything was going well and not to worry. If the former, then you will have a more difficult time proving liability. William A. Healy
Answered on Apr 29th, 2014 at 4:13 PM