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Can I Sue My Financial Advisor for Investment Losses?

Simms Law, P.C. June 14, 2022

When you rely on your financial advisor for investment advice, you do so with the belief that he or she has your best interests in mind. Unfortunately, however, financial advisors sometimes act in ways that result in investment losses. And if these losses can be attributed to the wrongful acts of your financial advisor, broker, or investment firm, you may be able entitled to damages through a lawsuit or arbitration. Below is some additional information on how to go about suing your financial advisor for investment losses.

Reasons You Can Sue Your Financial Advisor

If you’ve lost money due to fluctuations in the market, then you’ve simply experienced one of the risks of investing. However, if your financial advisor has failed to protect your best interests or hasn’t lived up to his or her obligations, then you may have grounds to sue. Common reasons that investors sue financial advisors include:

  • Failure to diversify, which is the overconcentration of an investor’s portfolio in a single industry or security

  • Churning, which is a fraudulent way to generate excessive commissions

  • Failure to perform due diligence prior to recommending an investment

  • The sale of securities that are not held or offered by the financial advisor’s investment firm

  • Failure of managers to appropriately supervise the work of their brokers and financial advisors

  • The sale of fake securities or products

  • Unrealistic promises of quick returns on investments

How can I file a lawsuit against my financial advisor, broker, or investment firm?

If you have lost money due to any of the above fraudulent or negligent behaviors, then you are eligible to file a lawsuit against your financial advisor, broker, or the investment firm with which your advisor or broker is employed. However, before you file a lawsuit, it’s important to first review the contract that you signed prior to becoming a client. Most investment firms require investors to seek damages via the FINRA arbitration process, so if your contract contains such a clause, you may not file a lawsuit in court. Fortunately, however, at Simms Law, P.A., we are experienced in both arbitration and courtroom litigation, and we’ll pursue your claim diligently in order to achieve the best result possible. At Simms Law, P.A., one of our primary focuses is the representation of investors—including those investors who believe they’ve been the victims of financial fraud. And as noted above, securities fraud can occur in a number of ways, including when a broker or financial advisor misrepresents the risks and key characteristics of an investment. Therefore, if you suspect that any suspicious activity has occurred in any of your investment accounts, or if you believe that you have been misled about the nature and risks of any of your investments, please contact us today for a free consultation.