Financial Losses – Sue your Broker?

Financial Losses – Sue your Broker?

As cooler weather begins to sweep across South Florida, the temperature isn’t the only thing that is dropping; the value of one amateur investor’s Roth IRA recently hit rock-bottom.  And judging by today’s financial climate, it’s safe to say that this particular worthless fund is just one of many.

The victim of the financial loss is a resident of South Florida who, over the past several years, has been inching toward retirement.  After a career of steadily earning roughly $40,000 and saving like Mariano Rivera, he recently invested more than $100,000 in the stock of a small company at the imploration of her financial adviser.  The small company in which he invested tanked roughly two months after the final investment.  Subsequently, later that year, the small company then merged with another small company and the entire value of the investor’s shares essentially evaporated like things tend do during a scorching South Florida summer.  He says the savings he lost are “irreplaceable.”  Who can argue?  It’s pretty difficult to come across $100,000, especially when you’re a single parent of three making under $50,000 a year in a booming economy, and even harder to do so in a plummeting one.

So what’s someone in his position to do?  Some might scoff and say that the stock market’s just a big casino and people should invest at their own risk.  That may be the case.  But consider this: neurosurgery is a dangerous procedure, but shouldn’t you be allowed to hold accountable a doctor who acted irresponsibly during the surgery?  Also, driving a car can be dangerous, but shouldn’t you hold your car’s manufacturer liable if the brakes in your car suddenly fail, causing an accident?  It’s more or less the same thing here.  This investor hired a financial broker to advise of the investments he suggested.  The rules of financial brokerage, as governed by FINRA (the financial industry regulation authority) mandate that brokers must notify investors of the risks associated with a given investment.  Apparently, the investment in the telecom company was a highly risky one with the chance for a great return.  But with any chance for a great return is the chance for a great loss, and that is what this man’s broker failed to make him aware of.

FINRA has an arbitration program for people to file claims against investment firms.  In addition, the agency serves as a supervisor for the industry, making sure that everything that goes on between brokerage firms and investors is legal and responsible, akin to the Bar Association in the legal world.  FINRA gives people the ability to research financial firms to see if there have been any claims made against them.  Tools like FINRA’s BrokerCheck serve as a good pre-business utility for people to check out before engaging in transactions with brokers they may not be entirely familiar with.  Unfortunately for this investor, he found out about these tools a little too late.  Now, he has filed a claim against his broker’s former firm, hoping to recoup the money he lost in the investment, legal fees, and interest.

FINRA operates on a federal and national level.  Locally, we have the Florida Office of Financial Regulation which oversees the world of financial transactions on a state-wide basis.  Checking in with both of these offices can save you a lot of time and money.  Think of it as the “Angie’s List” of the world of financial trading.  Trust me:  a negligent stock broker can do a lot more damage than can an untrained plumber.  Make sure you do research on anyone who may decide to trust with your money.

If you have been misled by a negligent financial adviser or broker, contact the Law Offices of Aronberg & Aronberg at 561-266-9191 or email us at

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