Alaska Investment Loss Attorneys
The Alaska Division of Banking and Securities recently reminded financial firms about their supervisory obligations to investor customers “to ensure that investor protection obligations are being met during recent price volatility in shares of publicly traded companies.” It also encouraged Alaskans to read investor alerts and bulletins on the SEC website. While many Alaskans have caught on to the self-directed investing platforms, many – in particular seniors and retirees – still rely on a broker or financial adviser to manage their money. Firms have an increased liability for supervision failures when its advisers or employees mislead customers (whether negligently or fraudulently) or cause financial losses when recommending securities that might not be suitable in light of the investor’s risk tolerance and investment objectives. For nearly 25 years, Malecki Law and its investment loss attorneys have provided legal representation to investors who have been victimized by financial fraud or lost money in private placements or the stock market. Our investment loss law firm can help Alaskans who have suffered stock market losses, whether due to a fraud or Ponzi scheme, negligence, unsuitable investments, or failed supervision of your account. Our securities attorneys are experienced practitioners in the FINRA arbitration forum, which is the forum most retail investors are required to resolve their claims. Generally, claims for retail investment losses cannot be brought in court.
Financial firms know that they have an obligation to follow industry rules and securities laws, which have long been in place for the protection of investors. When these firms fail to execute their supervisory responsibilities of customer accounts, regulatory bodies such as FINRA, the SEC, or state bodies like the Alaska Division of Banking and Securities (the “Division”), have authority to bring an enforcement action to include fines and victim compensation funds –more on this below, but these funds are often insufficient to make defrauded investors whole, requiring the help of a securities attorney.
In 2015, for example, Alaska’s Division secured a Consent Order from LPL Financial LLC, a major brokerage firm that has entered into many such regulatory enforcement orders in other states. This particular order determined that LPL did not have proper supervision in place relating to its sale of non-traded REITs (Real Estate Investment Trusts) (citing violation of NASD Supervision Rule 3010(a)) during the period of January 1, 2008, through December 31, 2013. As stated in the order, “Non-traded REITs generally carry significant investor risk in that they present liquidity risk and often have lengthy holding periods, restricted redemption options, and variable withdrawal periods determined by issuer specific programs.” This is much more restrictive than simply trading any other public stock or equity in the stock market, so investors who were recommended these products likely suffered losses or had no ability to exit their investments because of the aforementioned liquidity risks.
Alaska’s Division lists many enforcement orders of this kind on its website, but one glance at the list of targeted financial firms and it appears that LPL is an outlier as far as large firms go – for whatever reason, most of these “slap on the wrist” orders appear to be directed at individuals or smaller firms. This particular consent order falls in the wrist slap category as well, as it levied a fine of a little more than $10,000. While the order served as a public admonishment of LPL, most investors are unlikely to know about it before entering into a brokerage relationship with LPL. The order also made no attempt to set up a victim fund for affected investors, however, it directed LPL to “offer to remediate losses for all non-traded REITs sold by LPL to LPL clients, from and including January 1, 2008 through December 31, 2013, who were Alaska residents at the time” for transactions considered unsuitable for the investor or out of line with “LPL’s policies and procedures, including LPL’s Compliance Manual and Written Supervisory Procedures.” The order further ordered LPL to “create a team of individuals who are primarily dedicated to assisting Alaska Investors,” in other words letting LPL dictate who is eligible and how much they should be compensated.
Although regulators often set out with the right intentions – to protect the public – they often fall short of making financial fraud victims whole, as it appears to be the case in the above settlement with LPL and the Alaska regulator. For this reason, it is important to hire a securities law firm that is familiar with the industry’s supervision rules and to assess whether a separate, civil lawsuit can also be brought against the financial firm, and to determine whether the investor is entitled to a bigger recovery. Malecki Law’s investment loss attorneys often work with regulators to assist our clients who have been victimized by financial fraud, but we do so with the expectation that any assistance provided is a “one way street.” Meaning, the authorities expect you to cooperate and give them information about how you were defrauded, but in return they do not give you much information to help with your civil case or any other sense of progress in their investigation (or on whether an investigation even remains open in the first place). It is important to have an attorney familiar with securities and working with the authorities to ensure that your verbal or written statements are consistent and do not later preclude you from a civil recovery.
So although it may be comforting to know that the regulators are aware of your financial loss, it is still important to seek a parallel recovery via a civil lawsuit against the firm who harmed you. Our securities attorneys have recovered tens of millions of dollars on behalf of investors and retirees who have been harmed in the markets or suffered losses due to firm supervisory negligence. Whether in Alaska any other U.S. state, or internationally, Malecki Law follows all guidelines to ensure that you are properly represented in your state. Call us for a free consultation; many of our clients choose a contingency arrangement where we do not get paid unless you do.