FINRA Arbitration Attorneys

Most employers and employees understand when they enter into agreements that the employer is ultimately responsible for the training and conduct of its employees. This also applies to brokerage firms when it comes to training and supervising broker-dealers operating on their behalf.

When something goes wrong with an investment portfolio or the strategy a broker recommends to a client ends up costing them greatly, or resulting in fraud, an investor might be able to make a claim of Failure to Supervise in their arbitration against the firm.

If you believe your investments were poorly handled and want to hold brokerage firms accountable for securities misconduct and investment fraud, the FINRA arbitration attorneys at Oakes & Fosher can help. Our attorneys have a wealth of experience bringing these cases to court and finding recompense for their clients.

Failure to Supervise Claims

When a fraud claim is filed against a broker or brokerage firm, the firm may often be solely responsible for the financial losses. A Failure to Supervise claim might be made based on a variety of scenarios such as:

  • Failure on the brokerage firm’s part to train the broker properly
  • Failure to confirm the broker’s recommended and/or implemented investment plan before it was executed
  • The broker in the firm’s employ gave the investor false information about the investment sold to them, resulting in a loss

When you bring an investment fraud claim to a skilled securities misconduct attorney, such as the ones at Oakes & Fosher, your claim will be thoroughly investigated and receive the necessary scrutiny in order to pursue legal action.

Don’t let the opportunity to pursue this case pass you by, however, as claims like these have a statute of limitations the courts must follow.

Compliance Required with These FINRA Rules

In order for a brokerage firm to comply with FINRA rules, it must have have specific, but sensible, procedures and internal systems that work to protect against fraud and also monitor employee activity associated with ongoing investment management.

FINRA compliance rules include requirements such as having a designated supervisor, a designated office of supervisory jurisdiction, a written copy of policies at each of the offices, and other rules such as:

  • Screening during the pre-hire process
  • Communications, customer information, and transaction monitoring
  • Ensuring brokers are properly licensed and have completed current training
  • Annual inspection and review in order to meet compliance rules and detect and/or prevent violations

Financial brokerage firms should have both written compliance manuals with policies outlined to ensure customer accounts are properly handled, as well as computer systems that monitor the activities of brokers working for the firm on a daily basis. If a Failure to Supervise claim is made, the firm must be able to prove they did follow their own practices and policies or risk the claim being determined as valid, costing them not only fees but their reputation.

Various day-to-day activities a broker might be involved in that a supervisor must monitor might include:

  • What percent the account equity declined
  • What margin levels are present in the brokerage account (meaning what the balance is between the cost of managing the investment and the actual return)
  • Ensuring against excessive trading (churning) that might lead to a conduct violation
  • Ensuring against concentration of investments in too many of the same types of industries or options (called securities concentration)

If a brokerage firm fails to follow protocol, the outcome of investments made from an untrained or unmonitored broker could be devastating. The firm and the investor ultimately suffer because the firm is responsible for its employees, but mitigating risk should, in general, keep this from happening.

Investors concerned about portfolio performance or unsure if a Failure to Supervise claim would work in their favor in a securities misconduct case benefit from having a skilled attorney on their side.

Contact Our Securities Misconduct Attorneys

If you are an investor who is concerned your broker was not properly supervised, ultimately contributing to a significant loss in your investments, the attorneys at Oakes & Fosher can help. Bruce D. Oakes and Richard B. Fosher are tireless advocates for investors who have experienced fraud at the hands of an unscrupulous broker or a neglectful brokerage firm. Contact us today to schedule a free and confidential consultation.