Securities Litigation and Arbitration

For investors, securities fraud and negligence can be financially and emotionally catastrophic. If you are involved in a securities fraud or negligence claim, it is important to have an experienced NY fraud lawyer on your side. At the Law Offices of David S. Rich, LLC, we represent investors who have suffered financial losses due to securities fraud. We also handle a select number of securities fraud defense cases. Our diverse experience gives us a deeper and more nuanced understanding of securities fraud claims, which we use to our clients’ benefit.

Common Securities Fraud Claims

In Manhattan, securities fraud claims may be governed by both state and federal law. However, most securities claims are handled outside of the courts, through private arbitration. While there are numerous forms of securities fraud, investors are most like to experience the following types of fraud and negligence.

Churning

Sometimes, a broker excessively trades a client’s securities in order to obtain commissions. These excessive trades typically are outside the client’s financial needs, resources, or investment objectives.

You may have a churning claim if there is evidence that:

• Trading on an account was excessive for your investment objectives,
• The broker had control over the account, and
• The broker either intentionally defrauded you or acted with willful or reckless disregard for your interests.

If you notice frequent “in-and-out” transactions that do not result in financial gain, you may be the victim of churning. A NY fraud lawyer can help investigate your situation and guide you through the process of filing a claim.

Frontrunning

Frontrunning (or forward trading) occurs when a broker delays a customer’s order so that the broker can obtain financial benefit. For example, you ask your broker to purchase a large amount of stock. Frontrunning occurs when the broker delays your purchase in order to buy his or her own personal shares of that stock. When your large transaction is executed, the stock’s price would increase — allowing the unethical broker to sell the stock and make a profit.

Frontrunning can be difficult to prove, especially without legal representation. If you suspect your broker or firm is frontrunning, contact a skilled NY fraud lawyer as soon as possible. Your lawyer can help investigate your claim and may be able to build a case against the broker or firm.

Malfeasance

Sometimes, a broker or firm engages in unethical (and potentially criminal) behaviors, including:

• Embezzlement
• Insider trading
• Ponzi schemes

If you were the victim of serious broker malfeasance, your claim may involve a complicated (potentially class action) lawsuit in state or federal court. It is important to contact an experienced NY fraud lawyer as quickly as possible. A securities fraud attorney can help you seek justice and recover damages.

Misrepresentations and Omissions

A broker or brokerage firm cannot misrepresent or omit material information about security to an investor. A fact is material if an accurate disclosure would have significantly altered the investor’s decision-making. Misrepresentations and omissions may involve fraudulent research or inaccurate information about the safety and security of an investment. If you suffered financial losses due to a broker or firm’s inaccurate information, you may be entitled to monetary damages.

Price and Market Manipulation

A broker or firm engages in price manipulation when it impacts a security’s price by means outside the free-market system. Examples of price manipulation include:

• Inducing others to buy or sell a security as a means to raise or reduce its price, and
• Intentionally (and improperly) limiting the number of shares available.

As your NY fraud lawyer can tell you, sometimes a firm uses social media and other venues to distribute misleading or inaccurate information about a security, with the goal of manipulating demand.

Unauthorized Trading

Many investors do not realize that a broker cannot execute a trade without their prior approval. Your broker may be liable for unauthorized trading if he or she trades your securities and investments without this approval. Approval may be either oral or made through written discretionary authority given to the broker or another third party. (There are exceptions to this rule. For example, a broker may be able to make unauthorized trades if you have a margin account.) If you discover unauthorized trades in your investment accounts, contact a NY fraud lawyer immediately.

Unsuitability

Most securities fraud or negligence claims involve unsuitability. If a broker recommends or purchases securities that do not align with a client’s disclosed financial objectives and background, he or she may be liable. In order to prove an unsuitability claim, you must show:

• The securities or investments did not suit your needs,
• The broker or other defendant knew or reasonably believed the securities did not suit your needs,
• Nonetheless, the broker recommended or purchased the unsuitable securities,
• The broker or defendant either:
  • Intentionally made material misrepresentations about the securities’ suitability, or
  • Failed to disclose material information about their suitability, and
• You justifiably relied on the broker’s conduct to your detriment.

Senior citizens are common victims of investment unsuitability. For example, an annuity (which gets paid over a period of years) may not be a suitable investment for an elderly or ill investor.

Other unsuitability claims may involve a lack of diversification, over-concentration of investments in a single industry or product. For example, a broker may over-concentrate your portfolio in a single industry or product (such as tech or oil and gas funds, or in a type of security like bonds). If that specific sector falters, the investor may suffer disproportionate losses.

We have extensive experience handling unsuitability claims. If you have suffered financial losses due to unsuitable investments, a NY fraud lawyer may be able to help you recover some or all of these losses.

NYC Securities and Investment Arbitration

Unlike other negligence and fraud cases, most securities disputes must be arbitrated rather than litigated in court. Arbitration is a private dispute resolution process. In an arbitration, a panel of experts reviews the evidence, assesses the claim, and issues a binding decision. Different procedural rules apply in arbitrations than in civil court cases. For this reason, it is important to hire a NY fraud lawyer with significant experience in securities arbitration. Typically, these arbitrations are handled by the Financial Industry Regulatory Authority (FINRA).

At a FINRA arbitration, investors may proceed pro se (or without representation). However, this is typically not in your best interest. Securities fraud cases are highly technical. As such, they often require a complicated legal and factual analysis. Most investors simply do not have the knowledge and resources to successfully investigate, develop, and present their case. Additionally, most brokers and firms will have a skilled defense lawyer on their side. If you do not retain an experienced NY fraud lawyer, you may be at a serious disadvantage.

Talk to a NY Fraud Lawyer Today

Whether you are a defrauded investor or a firm defending itself, it is vital to have an experienced NY fraud lawyer at your side. The Law Offices of David S. Rich, LLC has handled numerous securities arbitration cases for investors, brokers, and brokerage firms. We pride ourselves on providing our clients with customized and aggressive representation. Contact our offices today.

If you or your company wants to bring, or needs a law firm to defend it in, securities fraud litigation or arbitration, contact a securities lawyer from the Law Offices of David S. Rich, LLC.

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