Frequently Asked Questions:

17. What are the general types of cases against stock brokers and investment advisors?

1. There are many potential claims against a stock broker or an investments advisor, but the most common type of claim involves unsuitable investments. Stockbrokers and investment advisors have a duty to recommend only suitable investments to their clients. Investments for one person may be suitable, but for another person completely unsuitable, depending upon the circumstances of that particular person. Also, an investment may be suitable if purchased with a small percentage of a client’s assets, but completely unsuitable if purchased with a significant portion of a client’s assets. Other types of claims include misrepresentations regarding the investment recommended, failing to perform adequate due diligence on an investment prior to recommending it, recommending fraudulent investments, such as Ponzi-schemes, and inappropriately borrowing or stealing money from a client.

17. Do I have to arbitrate with my stockbroker or investment advisor?

1. Almost invariably, the agreement you entered into with your stockbroker when you opened your account includes a pre-dispute arbitration clause, which does require you to arbitrate disputes that you have with your stockbroker. Registered investment advisors have also been inserting pre-dispute arbitration clauses in their agreements with clients in recent years, and you will likely need to arbitrate those claims as well.

17. Where do I arbitrate advisor claims?

1. In disputes with a stockbroker, you will almost always arbitrate with FINRA, a self-regulatory organization for broker/dealers. Arbitrating with investment advisors will likely depend on the forum chosen by the investment advisor in the advisory agreement, which may include the American Arbitration Association or JAMS.

17. Are there advantages to arbitrating my dispute with my financial advisor.

1. Yes, the arbitration process is generally faster and may be less expensive. Arbitrators also have the power to invoke equity, or fairness, when making a decision, which is not always available in a court of law.

17. What is your record in FINRA Arbitrations?

1. Jeffrey Feldman has never lost a FINRA Arbitration against a broker/dealer or registered representative of a broker/dealer, and he has won many of them. Most cases are settled.

17. What type of lawyer do I need to bring a claim in FINRA?

1. Like any legal matter, you want to retain an attorney with a lot of experience. Mr. Feldman’s practice has been almost exclusively in the area of claims against stock/brokers and investment advisors since 1991, and there are few attorneys in the country with more experience in this area than Mr. Feldman has.

17. My financial advisor is recommending leveraged and inverse ETFs and ETNs. Are these good investments?

1. Leveraged and inverse ETFs and ETNs are generally inappropriate investments for individual investors. By design, these investments are meant to be held for no more than one day, and to be traded by professional investors. These investments are also very complex, and difficult for advisors to fully understand.

17. Are reverse convertible notes good investments?

1. Reverse convertible notes are complex securities which carry a high level of risk and hidden fees. If your investment professional is recommending reverse convertible notes as a safe alternative to regular stocks or bonds, these investments are likely being misrepresented to you. Do not let the high interest rate fool you, as it is possible to lose some or all of your principal with these types of investments. Reverse Convertibles are also generally illiquid, so you may not be able to easily access your money.

17. If someone steals money out of my brokerage account, can I hold the brokerage firm responsible?

1. Often times you can. A brokerage firm can only send money out of your account if that transaction is authorized by an account holder. If you did not authorize a withdrawal from your account, you may have a good case against a brokerage firm to recover those funds.

17. If my investment professional has insurance, does this mean I will be able to recover losses if mistakes are made with my account?

1. Not necessarily. We have seen situations where insurance only covers certain types of investments, but the investments that the investment advisor recommended or misrepresented were not the type of investments covered by the advisor’s insurance policy. Also, if an advisor is making mistakes with your account, including recommending fraudulent or unsuitable investments, the advisor is likely doing that with many of the advisor’s clients, and the advisor may not have enough insurance to cover all claims that are brought against the advisor.

17. How do I know if I have a good case against my investment advisor or stockbroker?

1. The best way to know is to talk to an experienced lawyer like Jeffrey Feldman. Mr. Feldman provides free initial consultations to determine if you have a potential claim. Mr. Feldman generally represents clients on a contingency basis, where if there is no recovery, there is no cost to you.