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Badge - Super Lawyers Jenice L. Malecki

Investors

Investment professionals (often called brokers, financial advisors and/or investment advisors) and broker-dealers are licensed and registered with the state and with FINRA and/or the SEC, like doctors or lawyers are licensed with boards and bars. Disclosure and investor protection and two of the main mandates, as well as stability of the markets, in the Securities Exchange Act of 1933, the Securities Act of 1934, the Investment Advisor Act of 1940 and FINRA’s Conduct Rules. There are many rules and regulations that investment professionals, and the firms they work at, have to follow to protect you and the market.

Since the thrust of all of the laws is disclosure and investor protection, imbedded in that disclosure requirement is not only that they give you complete and accurate information, but to make sure that you understand it. You should not need to be a New York City securities attorney to understand something you are investing in. If you do not understand an investment, you should not be in it and it should not have been recommended to you under the rules.

These days, securities products (like structured proprietary products created by the broker-dealer, Leveraged ETFs, Notes, CMOs/CDOs, REITS, Variable Annuities and the like) have become increasingly complicated. Brokers themselves often do not understand the product, which is a real problem for investors and show a failure of supervision and training at the firm. Firms these days are notorious for creating complex products and withholding information from brokers who they pressure to sell to retail investors. Brokerage firms, whether operating as a large office or through a broker’s independent branch office, are legally responsible both for the brokers’ conduct, as well as its own conduct in failing to supervise, monitor and educate the broker as if everything a broker sold and everything a broker does needed approval (which in fact it does).

If you have a dispute with a broker or brokerage firm, you will be required to go to arbitration in most cases, a forum Malecki Law regularly appears in for investors. Watch Ms. Malecki on Wall Street Journal Live talking about it.

  1. Common Law Fraud (Scams) & Misrepresentations and Omissions under Federal Securities Laws
  2. Unsuitability and Regulation Best Interest
  3. Overconcentration
  4. Elder, Affinity, and Minority Fraud and Ponzi Schemes
  5. Churning / Overtrading
  6. Unauthorized Trading
  7. New Products, Defective Securities Products and Structured Products
  8. Sales Practice Violations
  9. Breach of Fiduciary Duty
  10. Private Placements, “Hedge Funds”, Limited Partnership Issues & Other Non-Conventional Investments
  11. Margin Violations
  12. Failures to Execute
  13. Failure to Supervise
  14. Breach of Contract
  15. Forgery
  16. Conversion and Theft
  17. Market Manipulation

Even if a product is simple, or you or your broker understand the product, there’s another line that needs to be crossed – why are you buying the investment at this time, in this market, and why it is recommended at this stage in your life? The same investment is not right for everyone and every investment is not right in every market period. When someone recommends an investment to you, they need to look at all these factors.

The problem with the brokerage industry is that brokers are commissioned salesmen, like car salesmen. Their work is often, unfortunately, judged by how much revenue they bring the firm, not how successful a client’s portfolio is. Sometimes those concepts are in line and correlated; sometimes, they are not and investments are recommended because of the high commission they generate.

Having successfully represented small to high net worth investors in cases against some of the industry's largest brokerage firms, the Manhattan-based securities fraud lawyers of Malecki Law provide free consultations and representation for investors to determine whether they have been victimized. Malecki Law's investment fraud attorneys have helped numerous investors recover tens of millions of dollars in losses and stand ready to represent you in lawsuits and arbitrations involving broker misconduct, fraud, negligence, and more.

Our investment fraud attorneys have experience in many forums, which we use to ensure the most advantageous and appropriate jurisdiction is being utilized for your case. Such forums include:

  • United States Securities and Exchange Commission ("SEC")
  • United States Commodities Futures Trading Commission
  • ("CFTC")
  • Financial Industry Regulatory Authority ("FINRA")
  • New York Stock Exchange ("NYSE")
  • American Stock Exchange ("AMEX")
  • National Futures Association ("NFA")
  • Municipal Securities Rulemaking Board ("MSRB")
  • Certified Financial Planners Board of Standards ("CFP Board")
  • Various State Attorney General Offices
  • Arbitration Forums
  • Mediation Forums
  • Federal Court
  • State Court

Our team of securities fraud lawyers at Malecki Law will provide legal advice and representation as a plaintiff or claimant in a multiplicity of matters ranging from routine suitability cases to complex disputes involving intricacies in federal securities laws and sophisticated options trading. The riskiest products carry the highest commissions, but they are not products right for everyone. Often, problem products are pushed out to market at a higher commission at exactly the wrong time to buy the product – call it a clearance rack. These the investments are really for speculators, sophisticated investors, with ultra-high net worth, who may know better and would actually never touch these investments. This leads to important areas where customers and their brokers and broker/dealers are in conflict with one another and a legal claim may arise:

1 - Common Law Fraud (Scams) & Misrepresentations and Omissions under Federal Securities Laws

Frauds (lying and deceit) and scams represent violations of specific rules created by state and federal government bodies to protect investors and the markets. Often these concerns involve specific lies a broker has told you or omissions of key facts by a broker making the balance of the information you have received untrue.

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2- Unsuitability and Regulation Best Interest

Unsuitability is a broker’s recommendation of investments not appropriate for your age, income, and/or objectives. For more information explicitly defining the legal definition of unsuitability, consult the following FINRA rules and regulations:

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3- Overconcentration

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.

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4- Elder, Affinity, and Minority Fraud and Ponzi Schemes

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 you may have a claim.

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).

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5- Churning / Overtrading

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.

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6- Unauthorized Trading

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).

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7- New Products, Defective Securities Products and Structured Products

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, 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. Too often brokers themselves to not understand the products.

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8- Sales Practice Violations

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.

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9- Breach of Fiduciary Duty

When the broker does not use the high degree of care in handling 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.

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10- Private Placements, “Hedge Funds”, Limited Partnership Issues & Other Non-Conventional Investments

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.

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11- Margin Violations

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.

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12- Failures to Execute

A broker not following a customer's direct purchase and/or sale instructions in a proper manner.

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13- Failures to Supervise

When the brokerage firm's senior personnel fail to properly review and monitor the brokers' work.

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14- Breach of Contract

A brokerage firm’s failure to live up to written and/or verbal agreements regarding the handling of your account, which includes FINRA and SEC rules and laws.

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15- Forgery

A broker’s wrongful signature of your name without your permission, copying and pasting your signature or altering documents you already signed.

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16- Conversion and Theft

A broker wrongfully taking control of your money, and/or transferring it to an account outside your control.

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17- Market Manipulation

The creation of a fictitious market environment by brokers, traders, and/or analysts to suit only their own profit objectives. “Pump and dump schemes” (otherwise known as “hype and dump manipulation”) refers to the steering of investor toward a stock (typically microcap companies, defined as companies with a market capitalization of $300 million or less) through false or misleading statements. With the stock’s value overstated, the committer of this fraud then sells the stock for large profits. The promotion of such schemes is common to the Internet and telemarketing, often perpetuated by paid promoters looking to gain from false hype. Once the stock is entirely sold off (or “dumped”) by the promoter, its worth plummets at the investor’s peril.

Depending on the claim and the state or forum where it is brought, there may be different statutes of limitations or time limits that a customer has to bring a claim, even in arbitration. If you suspect broker wrongdoing has contributed to investment losses, you should promptly contact Malecki Law to protect your rights.

More Information on Statute Specifics from the North American Securities Administrators Association

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Significant Arbitration & Mediation representations

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Client Reviews
★★★★★
Jenice Malecki is a highly successful securities law attorney. She is a brilliant strategist. She is a well respected litigator who knows how to win in court. As a former CEO and President of a public company traded on the NASDAQ (and currently a College President), I can attest, as a client, that Jenice Malecki's understanding of the law along with her business acumen and intellectual gravitas resulted in a 100% victory in my case before the Supreme Court of New York State. Jenice is a passionate and determined lawyer -- I want her in my corner -- anytime!​ Dr. John J. McGrath
★★★★★
I worked with Jenice and her team to successfully resolve a brokerage / securities related issue for an elder relative and was quite pleased with how they walked us through the process and took into account the challenges that age sometimes unfortunately present. They were all professional - and effective. I would use them again without question if the need arose. Bart
★★★★★
I have NO hesitation in recommending Jenice Malecki. She made a horrible situation bearable and performed above and beyond our expectations. April Voorhis
★★★★★
I highly recommend Malecki Law. It was a gratifying experience having Ms. Malecki incharge of our case. She is a true professional with a lot of experience. Jose Zorrilla