Shareholder Sean Sweeney details when the right time is to bring a claim against your financial advisor.

When can you bring a claim against your Financial Advisor?

  • When they breach their duty to you which has caused you a harm (loss of money).
  • When they recommend improper or unsuitable investments for you.
  • When you determine the form of damage done to you and your account.

“You can sue your financial advisor when they breach their duty to you which has caused you a harm.

So what does that mean in the context of a customer with a broker-dealer and investment claim? The way I think about it is the way that I was taught it in law school. Duty breach cause harm. So that’s the elements of any basic claim under the law for a breach of duty. So we start with, what was your financial advisors duty? Now it really depends on the nature of the account. Could be a fiduciary duty. It could fall under the new regulation best interest. It could be what we call a duty to make suitable recommendations. But regardless of which type of account for what type of duty that your financial advisor had to you, they had certain duties. And all of those duties encompass an obligation to only recommend investments that were appropriate for you, given your risk tolerance and your timeline.

So the next stage of the analysis is whether or not that duty was breached. Did they in fact recommend something that was inappropriate for you, sometimes called unsuitable for you, but too risky given your risk tolerance? Maybe too illiquid given your time horizon different various factors that go into whether or not an investment was appropriate or not. And did that recommendation, that breach of the duty, cause you a harm? Did you suffer some kind of a damage?

A damage takes a couple of forms. One is just losses. You lost money in your account. You lost money on the investment and if you can show that it was an investment that shouldn’t have been recommended to you, you have a claim. It may also be a missed opportunity. If you were invested entirely improperly in your account and you can show that you were damaged by not being invested properly. If you had been invested properly, what your games would have been in the account. That’s another way of measuring damages. There’s also what’s known as rescissionary damages under the various securities law, state and federal. Which basically says you get your money back for the investment plus some kind of a statutory interest minus whatever you got. Whatever income your received. But those all satisfy that last category the damages. How were you damaged.

So if you can show that there was a duty by the financial advisor, which they certainly have. If you can show that it was breached and you can show that it caused you some kind of a damage, then you have the makings of a claim and it may be able to bring a FINRA arbitration against your financial advisor to recover those losses or damages that you suffered.”

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.