A big issue for investors in today’s markets are the complex and opaque products that the industry creates that often are confusing and too difficult for your average investor to understand, and sometimes even a sophisticated investor. In fact, at times the brokers/investment advisors don’t even understand them. The New York defective securities investment lawyers at Malecki Law have experience handling these types of cases.
While these can be seen product liability cases, in a sense, they often involve sales practice violations. That means that your investment professional did not tell you everything you needed to know for advised you to do things that they knew were not right for you, such as employing margin. This is not only a violation of Regulation Best Interest discussed separately on this site, but can be a breach of fiduciary duty in the right circumstances. The New York defective securities investment lawyers can navigate these difficult waters for you.
Malecki Law has experience navigating clients’ ways out of illiquid investment, like private placements, as well. Experience matters. Jenice Malecki has over 30 years experience in this area.
Some securities products (such as CDOs, CMOs, and MBSs) should never have been sold to most investors. We deal with product failure issues in mutual funds, municipal securities, preferred securities, notes bonds, annuities, hedge funds, private placements, REITs, the aforementioned CDOs, CMOs, MBSs, and other structured products. Leveraged ETFs are for day traders and should not be held overnight.
Even when buying a well-known mutual fund or municipal bond, it must be sold properly, with full disclosure and considering a bonds features and expiration, or a mutual funds breakpoints, sales charges, and the like. Our defective securities investment law firm in New York is ready to handle these cases for you.
Sales practice violations occur when brokers engage in fraudulent sales practices, such as high-pressure sales tactics and misrepresentations or omissions regarding the investments or even the broker’s purported interactions with company executives. High pressure sales tactics are just what they sound like: Pressure to “get in now before it is too late,” “a once in a lifetime opportunity,” constant calling and befriending. A broker is a business relationship, not a friend. If it sounds too good to be true, it probably is not true.
When the broker does not use the high degree of care in overseeing your investment portfolio, such as recommending junk bonds as safe, or an annuity in an IRA (Individual Retirement Account). A fiduciary has a duty of loyalty to a customer and must act in the client’s best interest, putting the client’s interest ahead of his or her own interest.
These are Investments (often unsuitable and illiquid) that a broker has recommended into private companies not traded on an exchange. If the broker does so without disclosing the true nature of the unregistered, illiquid investment, or recommended despite failing to conduct proper “due diligence” on them before investing, you very well may have a case against the broker for money damages. Private placements are discrete rounds of investments offered privately, not publicly, to selected private investors and are usually suitable for high net worth and sophisticated accredited investors. Malecki Law’s defective securities investment attorneys in New York are available to give you a free consultation.
A broker’s failure to properly disclose the risks of margin trading and terms of margin loans, such as that a brokerage firm can sell out any securities in the portfolio at their discretion if your account equity (its value) dips below the minimum equity requirements of the firm for each of the stocks. Certain stocks have low equity requirements, others have high equity requirements, and some stock is not marginable. When a firm sells, it is called a “margin call” and it usually happens at the worst time in the market (or even the worst time of the day you are sold out). This means you will likely lose a lot of money. You can actually lose more than you gave your broker to invest, and you could wind up owing the brokerage firm money. However, if your broker recommended that you use margin, but did not fully inform you as to how it all worked, you may have an action against the broker and brokerage firm.
A broker not following a customer's direct purchase and/or sale instructions in a proper manner.
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