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Sales Practice Violations

From Jenice's interview for the Masters of the Courtroom series on
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From Jenice's interview for the Masters of the Courtroom series on
View Transcript

Sales practice violations occur when your financial advisor engages in fraudulent sales practices. Some of the most common sales practice abuses involve the following causes of action: unsuitability, churning, and unauthorized trading. If it seems like your broker may have engaged in one of the aforementioned forms of misconduct, it is also possible that your broker engaged in sales practice violations. A New York investment sales practice violations law firm like Malecki Law can review how your portfolio investments were sold to you at no cost. Under FINRA rules, a sales practice violation “includes any conduct directed at or involving a customer which would constitute a violation of any rules for which a person could be disciplined by self-regulatory organization; any provision of the Securities Exchange Act of 1934; or any state statute prohibiting fraudulent conduct in connection with the offer, sale or purchase of a security or in connection with the rendering of investment advice.”

Your broker may have committed sales practice violations if he or she engaged in fraudulent sales practices, such as high-pressure sales tactics and misrepresentations or omissions regarding the investments or even your 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,” and constant calling and befriending. If your broker made similar representations, you need an experienced investment sales practice violations lawyer in New York like the lawyers at Malecki Law to review your portfolio at no cost. Your broker is in a business relationship with you, she/he is not a friend. If it sounds too good to be true, it probably is not true.

Because sales practice violations can occur by a misrepresentation or statement made by your broker, as highlighted above, your broker is required to comply with certain communication rules. Your broker and brokerage firm are both subject to follow FINRA Rule 2210, which governs communications with the public. Communications may consist of any correspondence you had with your broker, including electronic communications. Investment sales practice violations attorneys in New York, at Malecki Law, understand the relevant sales practice rules and can analyze your situation to determine whether there is a viable claim. Under Rule 2210(d)(1), your broker and brokerage firm must engage in fair dealing and good faith regarding their communications with you. Thus, they cannot make false or misleading statements in their communications with you.

Mutual Funds

Although FINRA does not have the authority to directly regulate mutual funds, it is able to indirectly regulate mutual funds through the registered representatives that sell them to investors like yourself. Thus, it is important that your broker-dealer and/or advisor is compliant with the relevant advertisement rules under Rule 2210, as it relates to the mutual funds it chooses to sell to you. FINRA indicates that “no broker-dealer may make any false, exaggerated, unwarranted, promissory or misleading statement or claim in any communication with the public, or publish, circulate or distribute any communication that the broker-dealer knows or has reason to know contains any untrue statement of a material fact or is otherwise false or misleading.” If your advisor made extreme remarks about a mutual fund to persuade you to purchase it, you need a sales practice violations lawyer to further investigate. Especially if his/her remarks seemed too good to be true.

Bonds and Non-Conventional Investments

Your broker’s sales practice obligations related to bonds and non-conventional investments include understanding the underlying risks of the investments they are recommending, conducting adequate due diligence on the product at issue, ensuring the product is suitable for you specifically, and providing necessary disclosures. Additionally, your broker must have adequate training related to the sale of the product. If your broker failed to understand the risks and/or explain the risks related to a product they sold you, you might have a sales practice violation claim against them. A New York investment sales practice violations law firm like Malecki Law can review your potential case in a free consultation.

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