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The ABC's of Securities Litigation Claims
When wrongdoing beyond market forces cause investment losses, investors have a wide variety of claims they may assert. Understanding what conduct supports a legal claim will help you protect yourself from abuses in the future and identify actionable conduct if and when it occurs. If you recognize any of the following scenarios in relation to your own investments, you should contact an attorney with experience handling securities litigation claims to discuss your situation.
Breach of Fiduciary Duty
This claim comes from common law as opposed to a specific statute. Brokers occupy positions of trust and confidence with their customers; therefore they owe them the highest duty of loyalty and fidelity. Investment activity that violates that duty may entitle you to bring a breach of fiduciary duty claim.
Conflict Of Interest
Conflict of interest claims have recently received a great deal of media attention. They occur when a large securities firm conducts both investment banking activities and stock analysis and brokerage. Securities analysts may be tempted or persuaded to give a particular stock a strong evaluation if the company is a client on the investment banking side of the business. Similarly, lower ratings may be given to competitors of clients. In either event, investor losses linked to this conduct have the potential for recovery under a conflict of interest theory.
Churning
Excessive trading on a client's account is called churning. Sometimes stockbrokers trade excessively because they want to boost their own commission. Clients lose money due to unsound timing of trades as well as the added broker fees.
Failure to Diversify
Brokers who put all of their clients' assets in a single stock or industry may be subject to a claim for failure to diversify. Brokers are supposed to lessen some the risks of being in the market by keeping their clients monies invested in a variety of securities vehicles.
FAQs
- The investment newsletters seem so thorough--what should I watch out for?
- How do I protect myself from falling into a trading trap in which the website operators promise big returns?
- Commentators on investment bulletin boards sound so knowledgeable--should I heed their advice?
The Online Q & A Forum For Securities & Commodities Disputes
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