Investor Claims - Part 2

In today’s tumultuous markets, we can really see that overconcentration in one sector (like technology) can be big mistake – and your investment professional should know better, and your brokerage firm or Registered Investment Advisor Firm should also be supervising both your investment professional and your account. Diversification is key. The New York investment unsuitability lawyers at Malecki Law know that be it overconcentration, churning, elder fraud, Ponzi schemes or unauthorized trading, your broker should have known better than to put you in those cross-hairs.

Failing to diversify your investments over different asset classes (type of security, i.e., stock, bond, mutual funds, cash, etc.) and sectors (health care, financials, automotive, pharmaceuticals, consumer goods, technology, international, etc.), as well as "overconcentration" in any one of those areas, or even in a single stock, may be the reason for your losses and an actionable claim against your broker and his firm for allowing this to happen.

• SEC Beginner's Guide to Asset Allocation, Diversification, and Rebalancing (Revised: August 2009)
• Overconcentration in Retired Couple’s Account

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Dealing with senior citizens and those approaching retirement requires special care and planning. Many seniors are not up to date on the latest market trends, products, and strategies, as well as generally have special needs when it comes to liquidity, income, and safety. Preying om the needs of seniors and vulnerabilities, scurrilous professionals often try to market more speculative income-producing products to at or in retirement investors, which have income features, but also greater hidden risk (and bigger commissions). If you find yourself having experienced greater than expected losses and you are in or approaching retirement, that special care and planning may have been missing and Malecki Law’s New York investment unsuitability lawyers will carefully review your documents and information to determine what claims best fit your circumstances.

Affinity fraud is defined as fraud specifically committed against members of a unified group. Examples include schemes that target the elderly (often within the same community), religious institutions, persons of a particular ethnicity, or professional organizations. Fraud is often committed by one who indoctrinates into the group in question, by convincing community leaders and other members that he or she is a friend and that a crooked investment is legitimate. Many affinity scams involve “Ponzi” or pyramid schemes, wherein new investor money is paid to prior investors, to falsely make the investment appear profitable. In actuality, much or all of the money is stolen by the schemer(s).

• FINRA Key Topic: Senior Investors
• Ponzi Schemes
• Minority Fraud
• Industry Obligations Relating to Senior Investors
• Variable Annuities Sold to Elderly Investors
• Sales of Bond Funds
• SEC Investor Alert – Affinity Fraud: Hot to Avoid Investment Scams That Target Groups
• Investor.gov – Affinity Fraud
• Investor.gov – Ponzi Scheme “Red Flags”

Investment unsuitability law firm in New York, Malecki Law, knows first hand, having represented hundreds of Ponzi victims, that Ponzi schemes aren’t suitable for anyone – they are a fraud that the broker and brokerage firm should have caught and stopped.

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Churning refers to the excessive account trading for the broker’s own commissions and/or profit, while exercising control over your money. Control is exercised in situations when an investor is unable to evaluate recommendations and a judgment is made by the broker on the investor’s behalf, whether or not it was discussed with the investor. Overtrading is essentially the same as churning but refers to excessive trading that is not in line with the customers’ need and objectives.

• SEC.gov: Extended Definitions of Churning and Excessive Trading

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A broker’s trading of your account without asking your permission. Even if a security was discussed between you and your broker in a general sense, a customer must give permission for the specific security, in the specific amount and on the specific day the order is placed (which must be contemporaneous with that discussion, not at a different time in the day because markets can move and firms must provide customers’ with the “best execution,” a term of art and rule in the industry).

• SEC – Unauthorized Transactions Defined

When you have a brokerage account, you have the right to be well informed about your investments and investment unsuitability attorneys in New York at Malecki Law will hold your brokerage firm or registered investment advisor accountable for taking that control away from you and not following what was in your best interest.