Fitapelli Kurta is a national law firm that represents investors in cases involving investment and securities fraud. Our securities fraud practice is unique because our law firm does not represent any banks or major financial institutions – only harmed investors. We also never charge hourly for our services. We only accept cases on contingency, meaning our firm is not paid anything unless we are able to successfully recover funds on our client’s behalf. Because we work this way, we have a vested financial interest in the success of all of our cases. If our clients aren’t successful, neither are we.
Proven Track Record
We have recovered over $100 million prosecuting investment and securities fraud cases for investors throughout the United States. While most of our cases conclude with a confidential settlement, our firm has taken numerous cases to verdict – achieving multiple individual verdicts in excess $1 million. This willingness to try difficult cases has earned us industry awards and favorable press. However, and more importantly, our successful track record has also earned us a reputation in the financial industry among major financial institutions and the large law firms that they employ to defend them. We are known in the industry as being smart, aggressive and creative litigators.
Often, investors retain professionals to make investment decisions for them because they do not have expertise in securities and other investments. Brokers owe a duty to investors, who have entrusted them with these critical decisions. Unfortunately, not all brokers are trustworthy. If you were a victim of stock fraud anywhere in the U.S., the experienced securities fraud lawyers at Fitapelli Kurta stand ready to help you. Our knowledgeable team can investigate the specifics of your situation and pursue recovery from any parties responsible for defrauding you.
Common law, statutes, and SEC rules prohibit securities fraud. Under SEC Rule 10b-5, for example, it is illegal for someone to either directly or indirectly use any artifice, scheme, or device to defraud, using any means or instrumentality of interstate commerce, the mails, or a facility of a national securities exchange. It is also illegal to utter an untrue statement of material fact or fail to state a material fact that is needed to ensure that a statement is not misleading. It is also illegal to be involved in a practice, act, or course of business that operates as a fraud or deceit in connection with buying or selling securities. A plaintiff would need to show a material omission or misrepresentation by the defendant, scienter, a relationship between the omission or misrepresentation and the securities transaction, reliance, economic losses, and causation.
Breach of Fiduciary Duty
If you are an investor, you should be aware that certain advisors owe you a fiduciary duty, meaning that they must use their special knowledge and skill and put forth their best efforts for your benefit. Generally, an investment adviser who owes you a fiduciary duty needs to use reasonable care when acting on your behalf or advising you, should avoid misleading you, needs to look out for the best price and terms with each transaction, and should put your interests above their own. A fiduciary should not utilize your assets for their benefit, should fully disclose material facts about transactions, should avoid conflicts of interest when possible, and should disclose potential conflicts of interest. A breach of fiduciary duty can happen in many different ways. It can include misrepresentation, unauthorized trading, or churning. However, not all financial professionals owe a fiduciary duty, and it is important to consult an experienced securities fraud attorney if you believe that you have a claim.
Breach of Contract
Sometimes harm to an investor is a result of a breach of a contract rather than fraud. When you open an account with a brokerage firm, you may be given to understand that your account will be handled in a certain way. Breach of contract can occur in a securities context when a brokerage firm or other financial professional does not abide by an agreement with an investor regarding an account. Typically, when an investment account is opened, a new account agreement is signed in which the brokerage firm agrees to certain obligations toward the investor. There may be implied or oral promises as well. In New York, for example, a securities fraud lawyer can show a breach of contract by proving that there was a valid contract, one or more parties materially failed to meet the contractual terms, and the breach caused damages.
Under the federal Securities Exchange Act, you are protected against untrue, false, and misleading statements made by brokers. A misrepresentation can occur, for example, when a broker fails to disclose material facts about a security or other investment that could have a significant effect on your finances. A material fact is information that would be a significant consideration for a reasonable investor trying to make a decision about a security or other investment. For example, if a broker does not disclose the level of risk involved with a particular stock, this may be a misrepresentation. Your securities fraud lawyer would need to show that the investment professional knowingly made a false representation of material facts, the professional intended for you to rely on the misrepresentation, you justifiably relied on the misrepresentation, and the misrepresentation was a significant reason for your decision.
Many investors assume that they do not have a claim if a stockbroker or other financial professional did not perpetrate intentional misconduct. However, in some situations, it may be appropriate to sue a financial professional for negligence even if their conduct does not seem to rise to the level of fraud or misrepresentation. Negligence occurs when the defendant departs from the legal standard of care. Generally, the standard of care will be what is expected for a particular group of professionals, and it is lower for brokers than for investment advisers. Brokers owe clients a duty of suitability, which is not as high as a fiduciary duty.
The SEC prohibits account churning. Churning occurs when a broker conducts excessive transactions, whether these are purchases or sales of stock, to generate commissions instead of to advance the investment objectives of a client. It usually happens if a broker has complete control over a client’s investment transactions, such as when discretionary or managed funds are involved. Brokers are supposed to act in accordance with laws and regulations, including those promulgated by the Financial Industry Regulatory Authority (FINRA). They should reasonably believe that a transaction is suitable for a particular client, based on the client’s objectives and financial circumstances, if they enter into a transaction on the client’s behalf.
Financial Elder Abuse
Elderly people are vulnerable to fraud, Ponzi schemes, and financial abuse. Often, their isolation, incapacitation, or other disabilities render them particularly susceptible to scams. It can be difficult to spot financial elder abuse because the person perpetrating the abuse may persuade the target that the actions are in their best interest. If you are an elderly investor, it is critical to research any broker or other financial firm to make sure that it is registered with the SEC and FINRA. FINRA’s BrokerCheck Report allows you to conduct this necessary research and to determine whether a broker or firm has prior FINRA disputes or arbitrations. You should consult an experienced securities fraud attorney if you suspect that you or an elderly loved one has been a victim of churning, misrepresentation, or other abuses.
Failure to Diversify
A fundamental investment rule is to diversify your portfolio so that your risk is spread out among multiple investments. Diversification should occur across sectors and asset classes. A failure to diversify can result in substantial losses. Generally, failure to diversify claims are considered based on the particular facts at hand. However, it is possible to look at judicial decisions for guidance about whether a certain concentration is inappropriate. For example, in one case, it was determined that a 70% concentration in government bonds that matured on one date generated an unreasonable risk and involved insufficient diversification.
Failure to Supervise
Under both federal securities laws and FINRA regulations, broker-dealers are supposed to supervise their brokers. Section 15(b)(4)(E) of the Securities Exchange Act of 1934 obligates broker-dealers to reasonably supervise brokers in order to prevent securities violations. Broker-dealers are supposed to train brokers appropriately, make sure that brokers recommend suitable investments, and make sure that brokers give investors accurate information. Your securities fraud lawyer may be able to hold a brokerage firm responsible for a broker’s negligent or intentional acts. Brokers must comply with the duty of suitability and must not put their own interests ahead of client interests.
Failure to Execute Trades
Occasionally, stockbrokers fail to execute trades. An order can get lost, or in other cases, a client may want to sell a stock that the broker does not want to sell. You can sue a broker or a firm for failing to execute trades, as long as the failure to execute a trade resulted in damages. However, you do not have a claim if the broker persuaded you not to make a trade, and this was the reason why the trade did not happen. At issue is whether you believed that a trade would occur after speaking to the broker.
It can be challenging to recognize Ponzi schemes. Ponzi schemes occur when an operator pays investors returns from money made from new investors rather than from the investment’s actual profits. The operator keeps the profit that is actually made, and any payments are not returned to investors. The only money that goes into the scheme is from new investors, so if the operator can no longer recruit new people (or is caught), there is no more money, and the investors stop getting paid. Often, it is challenging to get the money back because the operator may have already spent the investors’ money. There are a number of red flags that an investment may be a Ponzi scheme, including investments that are not registered with the SEC and do not meet an exception under SEC rules, very consistent returns, high returns that do not have any risk, brokers who are not registered with FINRA, and complicated strategies.
Discuss Your Case with a Skilled Securities Fraud Attorney
If you were a victim of fraud in the securities industry, you can consult the securities attorneys of Fitapelli & Kurta. Our founding members began their legal careers at large defense firms, representing investment professionals and organizations. However, they now dedicate their valuable time, knowledge, and insights to serving investors who have been wronged. We have substantial skills and resources and have earned notable results for investors across the nation, including many arbitration settlements that have totaled millions. Call us toll-free at (877) 238-4175 or use our online form to set up an appointment.