Shareholder Sean Sweeney explains the most efficient way to file a complaint against a Financial Advisor.

How to file a complaint against a Financial Advisor

  1. Identify whether or not you have a claim (did your broker-dealer do something wrong that’s actionable)
  2. Determine what your damages are
  3. File a complaint through the FINRA arbitration process

“The most effective way to file a complaint against a financial advisor is to bring a claim against them in FINRA arbitration. They can only bring a claim against them if they are actually registered with a broker-dealer – a Wall Street Bank, but an investment bank that’s actually registered with FINRA. Those are the entities for which you can bring a claim in FINRA arbitration. But the actual steps to bring a claim is first identifying whether you have a claim. Every case is really broken down into liability and damages.

So first is to establish whether or not they did something wrong that’s actionable. The fact that your account lost money is not in and of itself enough to bring a claim. There has to be some violation of the duty of your financial advisor in order for you to be able to bring a claim to try to recover. This can be that they put you into unsuitable investments, term of art meaning things that were too risky for your risk tolerance or time horizon. It could be that they had discretion over your account. They get to choose the investments and they breach their fiduciary duty. Again, they invested your funds in a manner that was improper for you. Typically you’re going to indicate when you open an account what your risk tolerance is, what your time horizon is, what your investment objectives are. And they’re supposed to only provide advice that’s consistent with those. If they don’t do that, then you may have a claim.

The next is to determine what your damages are. We have a couple of different ways of measuring damages and it kind of depends on what the nature of your claim is. But the first thing you’re always going to look at is what are your net out-of-pocket losses. What did you actually lose as a result of the conduct of your financial advisor? From there we’re also of course going to look at what is the opportunity cost? What did you lose as result of not getting proper investment advice? We often measure this by what’s called a “well-managed portfolio” (Or, a “market adjusted portfolio” is another term for it) something where we might have an expert witness take a look at your investments and calculate what you would have had if it had been invested properly or consistent with your risk tolerance and investment objectives and determine the damages from there. The other damages that you might seek are statutory interest on the money that you have lost as well as actual attorneys fees. The FINRA Arbitration Forum does allow for those damages though it’s not common for those to be awarded.

If you determine that you have a claim, then you file a complaint through the FINRA arbitration process and the process goes from there. You can see some of our other videos about what’s entailed in that process But, basically, it goes through and you have your claim ultimately decided by a panel of arbitrators instead of a judge and a jury.”

The Securities Lawyers practice group at Halling & Cayo, S.C. can help. We take cases all over the country, and we only get paid if we win. Contact us to set up a meeting to review your case.