If you have lost a substantial amount of money in an investment scheme that has gone south, you don't have to simply accept that you were the victim of market forces. Just as doctors and lawyers can be liable for malpractice, stockbrokers can fail to meet the standards of care set by the law and by the industry. In some cases, the actions may be a clear breach of fiduciary duty. In other cases, your losses may simply stem from carelessness or negligence by an investment professional.

TCS fights for the rights of individuals who have suffered financial loss due to stockbroker malpractice. TCS knows how difficult and intimidating the legal process can be, especially for people who have never been there before. We understand how hard it can be to try to stand up to powerful and heavily financed companies in the investment banking world. We shall be your voice, a staunch advocate to help you get full and fair compensation for all your losses.

A brokerage firm or broker can be held liable if that firm or broker misrepresents material facts or omits to disclose material facts to the investor regarding an investment, and that client subsequently loses money on that investment. Often the misrepresentations or omissions disguise the risk associated with a particular investment. A broker has a duty to fairly disclose all of the risks associated with an investment.

One of the most important rules of investing is diversification. If a broker concentrates your portfolio in any individual investment or type of investment, then the risk of losses with that portfolio is dramatically increased. It’s the old adage that it is unwise to place all of your "investment" eggs in one basket. A broker who does not diversify his client's portfolio is potentially liable if that investment declines in value.

TCS protects the rights of people who have suffered financial loss due to the intentional or negligent acts of stockbrokers or investment advisors. The firm handles stockbroker malpractice involving:

• Breach of fiduciary duty. Your financial advisor or investment professional has a duty to put your interests ahead of his or her own financial interests. This duty may be violated where a stockbroker has a personal interest in an investment sold to you, or where investment recommendations are driven by the amount of commissions paid, rather than whether they fit your needs or investment profile.
• Failure to disclose all known risks. Your broker may persuade you to buy a risky investment by not disclosing the full nature of the risk.
• Failure to exercise due diligence. A stockbroker may be liable for making investment recommendations without fully researching the company, industry or risks involved.

With stockbroker malpractice, every case is different. TCS will evaluate each case on an individual basis to determine whether you are entitled to compensation.

In making an investment recommendation to a client, a broker must make recommendations that are consistent with the customer's risk tolerance, needs and investment objectives. A broker has a duty to know his client and only recommend investments and trading strategies that are suitable for that client. An investment may be unsuitable if a customer does not have the financial ability to incur the risk associated with a particular investment, if the investment was not in line with the investor's financial needs or if the customer did not know or understand risks associated with certain investments.

A broker has a duty to gather essential information in order to understand the risk tolerance of an investor, the tax considerations for the client, the client's prior experiences and appetite for risk, and the level of return desired. It is the duty of a broker to make recommendations that are appropriate and suitable given his client's circumstances. If a broker breaches those duties and makes unsuitable recommendations for a client, the broker may be liable to that client.

The issue is not whether a broker picked the right stock, anyone can make a mistake, but whether the broker picked the right type of investment. Example: bonds and lower risk stocks for a retirement account rather than high risk stocks only.

A broker must also have a "reasonable basis for the recommendation". The broker's basis for the recommendation can be the firm's research, in which case the firm must have a reasonable basis for its own recommendation.

Churning occurs when a broker engages in excessive trading in an account. A broker churns an account in an attempt to generate commissions. Many times he will sell the winners to show a small profit, and keep the losers.

To establish that your broker has churned your account, we will demonstrate that the pattern of trading activity in your account was excessive. This can be done in a number of ways including calculations to determine the annualized rate of return that would be necessary to cover the commissions charged in your account; the number of times the equity in your account is turned over to purchase securities; and the purchase and sale trading activity that occurs in your account.

When brokers buy and sell securities in an account to generate commissions, they usually convince their clients of reasons the clients should take quick profits. While these reasons seem valid, these are often simply excuses for the broker to charge excess commissions. In such cases it is often possible to demonstrate the account was actually being churned.

There is little incentive for a broker not to place an order. However, millions of transactions occur each day and mistakes are made, including failures to place orders. As well, although technology has reduced the possibility, orders do get lost. Clients who have made investments can take action for such negligence by the broker or firm.

At times, a broker does not want to place an order that the client desires. The client may wish to sell a stock but the broker is opposed. The issue is whether, at the end of the conversation, the client believes the transaction will take place. If the broker talks the client out of the transaction then it is difficult for the client to seek damages.

If the broker or firm refuses to place an order the client may have a valid complaint. If the order is an "opening" order - a purchase order or short sale - the broker or firm can refuse to take the order (except under certain circumstances). However, if the order is a "closing" order - liquidating a position or covering a short position - the broker or firm should not refuse the order.

Of course, the failure to place the order must result in damages. Example: The broker does not sell and the price drops. In any event, execution failures should be addressed as soon as possible in order to recover losses.

When promises are made and consideration paid (or if the person promised reasonably relies on the promise and takes action) a contract is formed. Contracts can be written, oral or even implied by the actions of the parties. While oral and implied contracts are more difficult to prove, legal action can be taken when such contracts are breached.

If an investor opens an account with a financial firm and is led to believe his or her account will be handled in a certain manner, a contract therefore exists between the financial firm and the client. When the account is not handled as promised and losses occur, the investor can consider legal action.

When most investment accounts are opened a new account agreement is almost always signed. This agreement usually exists in addition to promises made to the clients. Most claims against brokers and other investment advisors involve breach of both written agreements and oral promises.

Regulation of the securities industry is delegated by the Securities Exchange Commission (SEC) to self-regulatory organizations (SROs), primarily the National Association of Securities Dealers, Inc. (NASD). The NASD and other SROs have rules and regulations designed to protect investors. Brokers and their firms must enter into contracts with the NASD and other SROs to become registered representatives and member firms. Investors are the intended third-party beneficiaries of these contracts with the regulators.

Additionally, under the "shingle theory" cases have determined that when a brokerage firm "hangs its shingle" it has a duty to investors to follow the rules and regulations of the securities industry.

Some persons - even some lawyers - are of the mistaken belief that investors must demonstrate that a broker or firm committed securities fraud in order to seek recovery. This mistake may stem from the narrow requirements placed on class action securities claims, which must now be filed by demonstrating fraud under Federal securities laws in Federal Court.

We all owe a duty to others not to drive recklessly, light a fire too close to a neighbor's house or otherwise act in a negligent manner. This also applies to financial firms, stockbrokers and other advisors who can also be held liable for their negligent actions or inactions.

Many persons fail to file claims against a financial advisor or firm because they do not want to accuse that person or firm of fraud or to otherwise reflect on their licenses or character. Yet, few of us would fail to seek recovery of our losses if our neighbor backed into our automobile or caused our house to burn.

Generally, such claims against advisors and their firms are determined in private arbitration and lawsuits are rarely filed. This process involves less participation by the investor than in court cases and the matter is usually resolved in less than a year.

Anyone can make a mistake, but we are all responsible for our actions (or inactions). If negligence by a broker or firm caused losses to an investor the broker or firm should reimburse the investor for those losses. Not all losses are caused by negligence or other wrongdoing, but why not seek (free) legal advice if you have sustained significant losses.

Each brokerage firm must "design and implement written procedures" in order to properly and effectively supervise the activities of each of its brokers and other employees. When a broker engages in negligence or wrongdoing that causes damages to a client the supervisor is also subject to liability for allowing the act(s) to occur.

Every brokerage firm must supervise every broker licensed by that firm. Even brokers who are "independent contractors", including those who operate out of their homes must be supervised.

Every broker must complete training and pass an exam administered by the National Association of Securities Dealers (NASD) and, as well, pass a multi-state exam to sell securities in the state(s) where his clients are located. In addition to these licenses, supervisors of brokers must train to pass an even more difficult examination to be licensed by the NASD as a supervisor.

Firms and supervisors often claim they cannot be liable for a failure to supervise unless the broker is found liable for wrongful acts. However, it is quite possible for a supervisor or firm to be liable to the client for damages without the broker being liable. For example, if the broker was improperly trained, given false information by the firm, not properly licensed, et cetera, the firm may be liable to the client for damages even if the broker is not.

A "fiduciary" is defined in law as one who has the legal duty to act in the best interest of another. A "fiduciary duty" is an affirmative duty of good faith that compels the fiduciary to place the client's interest before his or her own interest. Laws in different jurisdictions determine who is considered a fiduciary and the duties of fiduciaries.

When a broker agrees to execute an order, the broker and the firm have a fiduciary duty of "best execution" - to not place the firm's interest before the clients and to execute the order at the best price available in the marketplace.

When brokers agree to manage clients assets and/or obtain permission to place orders on their behalf, the brokers have additional fiduciary duties to these clients. Financial Advisors have an even greater fiduciary duty to their clients, and brokers and their firms are often considered fiduciaries to their clients when performing the same function.

Recently, a Federal appeals court determined that when brokerage firms handle client accounts in fee-based "wrap accounts" they are subject to the Federal Investment Advisors Act of 1940. This Act places a fiduciary duty on investment advisors. Prior to that decision, the SEC had granted an exemption from this act for stockbrokers and their firms.

A claim for "breach of fiduciary duty" is considered in the nature of a fraud under laws of most jurisdictions and this claim is afforded certain legal benefits over other claims such as negligence.

Five Basic Questions

Here are five basic questions to ask yourself to determine if you may have a case:

1. Did the transaction(s) complained of occur within the past six years?
2. Do you have most of the account documents necessary to support the allegations?
3. Did you recommend the purchases and sales of the investment/s in your account, or did your stockbroker?
4. Do you have previous investment experience?
5. Did you invest with a legitimate brokerage firm?

Evaluating Claims

The first, and in many respects the most important, question for any investor is: Do I have a case? Not only does this keep you from wasting your time on a meritless claim, it also helps avoid having costs awarded against you for frivolous prosecution.

Although arbitration is based more on equity than law, there are basic legal necessities that every claim must satisfy before it is considered valid. To present a claim, you must have a "cause of action," and "damages." In other words, someone has to have done something wrong (or negligent), and the complainant must have lost money as a result. As a general rule, if you didn't lose money, you have no case.

Even before the above determination, you need someone to go after, you need to be able to establish the arbitration's jurisdiction over them, and you need to make sure the case is not too old. The simplest way to determine the latter is to ascertain if the firm and/or broker is a member of one of the national or international exchanges or international self regulatory organizations. Each of these bodies requires arbitration by its members upon the demand of a public customer. No written arbitration agreement is required. If they are a member of FINRA, they must arbitrate. If they are a FINRA member, it will be noted on your monthly statements and other documents that you received from your brokerage firm.

If the case is less than six years old, FINRA will allow it to file a claim, but the arbitrator may dismiss it based on the relevant statute of limitations. These vary from state to state, and for different causes of action. They may be as short as a year, or as long as ten years. As a general rule of thumb, any cause of action over four years old may well have problems unless "discovery" is a triggering event.

An exception may be carved out of this body of law in the case of "fraudulent concealment" If you can show that the Respondent deliberately withheld or concealed vital information from you, which prevented you from finding out what was going on, then you may be able to have the statute of limitations tolled for some length of time. Caution: This is not easy.

The most common causes of action involve unsuitable investments (too risky), churning (excessive trading), fraud (the broker didn't tell you something, or outright lied), negligence (the broker was simply careless), or failure to follow instructions (failure to tender, or forgetting to put on a stop loss, for example).

In summary, when you evaluate your case, ask yourself these questions:
Is there a viable someone to go after?
Can I force this person/firm to arbitrate?
Do I have a valid claim?
Do I have a valid loss?
Can I prove all of this to a neutral party?

CASES

These are some of the firms we are currently investigating: