Cambridge Investment Research Losses: What Investors Need to Know
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Cambridge Investment Research losses may raise serious questions for investors who trusted a financial advisor to protect their portfolio, follow their investment goals, and explain the risks of recommended products. While not every loss indicates misconduct, some losses may involve unsuitable investment recommendations, excessive trading, unauthorized trading, selling away, overconcentration, or supervisory failures.
Investors who worked with Cambridge Investment Research Advisors may need a structured account review if their losses appear inconsistent with their goals, risk tolerance, or financial needs. A stockbroker fraud lawyer can review account records, trade confirmations, client profile information, and broker communications for signs of misconduct.
Typically, brokerage firms require investors to pursue their claims through FINRA arbitration. Securities fraud attorneys can help investors file claims with FINRA Dispute Resolution Services in every state, setting them on the path to recovery.
Kurta Law securities fraud attorneys have hands-on experience proving allegations of broker misconduct through FINRA arbitration.
What Causes Cambridge Investment Research Losses?
Cambridge Investment Research losses can happen for many reasons. Markets move, investment products carry risk, and no brokerage firm can guarantee performance. However, some losses may involve broker misconduct or firm supervisory failures.
Broker fraud is a broad term for violations of FINRA and SEC regulations. A Cambridge Investment Research broker fraud investigation may find evidence of several forms of misconduct, including:
- Unauthorized trading
- Churning
- Selling away
- Unsuitable investment recommendations
- Misrepresentations and omissions
- Failure to supervise under FINRA Rule 3110
Stockbroker fraud attorneys use their knowledge of regulatory standards and the securities industry to identify patterns of misconduct involving a diverse range of investment products. This is why it’s important to seek out a structured case review if you suspect broker fraud.
Kurta Law has helped investors recoup their losses in broker fraud claims involving a wide array of investment products.
Cambridge Investment Research Advisors and Broker Misconduct
Cambridge Investment Research Advisors work with investors across a range of financial goals, account types, and investment products. When an advisor recommends investments, uses discretion, or communicates risk, those actions may become important evidence in a broker misconduct claim.
Investors do not need to know the exact rule their advisor may have violated before seeking help. Instead, they should look for signs that their Cambridge Investment Research losses do not match the strategy, risk level, or expectations they discussed with their advisor.
Like other large investment firms, Cambridge Investment Research has been the subject of many investor complaints. Investors have filed broker fraud claims involving unsuitable investment recommendations, excessive trading, selling away, and other allegations of misconduct.
Cambridge Investment Research has also been named in regulatory actions by state and federal regulators, including FINRA and the SEC.
Do Allegations of Broker Fraud Indicate Firm Liability?
No. Allegations made by previous investors do not indicate firm liability, and neither do settlements or arbitration awards.
While arbitration panels may consider patterns of misconduct in other clients’ accounts when evaluating claims, this consideration is limited in scope and does not include past financial settlements.
Cambridge Investment Research Losses From Churning
Churning violates FINRA Rule 2111’s requirement of quantitative suitability. When a broker executes an excessive number of trades, they generate trading fees that can severely reduce or even cancel out the investor’s profits.
Excessive trading also generates commissions for the broker, making it more beneficial for them than their client.
Arbitration panels consider the following factors when evaluating churning claims:
- Alignment with investor goals
- Cost-to-equity ratio
- Commission-to-account-value ratio
- Turnover rate
- Average holding period
But churning is more than a matter of metrics. Arbitrators will also take a look at your risk tolerance, net worth, investment goals, and other information that provides context for your broker’s trading activity.
For example, rapid in-and-out trading may be considered suitable for a sophisticated day trader, but not for a senior with a goal of supplementing their retirement income.
Firms that fail to identify signs of churning may be found liable for their brokers’ unsuitable trading. We’ll discuss failure to supervise in more detail in a later section.
Unauthorized Trading and Cambridge Investment Research Losses
Broadly speaking, any trading that is not explicitly approved by the investor is unauthorized. FINRA Rule 3260 prohibits the use of trading discretion without prior written authorization from the client.
Unauthorized trading may occur in several ways:
- Trading when an investor is unavailable to authorize it
- Marking unsolicited trades as solicited
- Requesting approval after trades
- Unapproved material changes in strategy
Brokers may defend their trading by claiming that investors knew about their activity, provided approval for trades implicitly, or provided authorization after the fact. You may still have a case even if you provided informal permission for trades or discussed them with your broker.
Unauthorized trading can occur in both discretionary and non-discretionary accounts. Discretionary accounts provide brokers with greater power to exercise their trading discretion, but this activity can still be unsuitable and fraudulent.
If you believe that trading activity in your brokerage account is unsuitable for your investment goals, reach out to an investment fraud attorney for a case evaluation.
Unsuitable Recommendations by Cambridge Investment Research Advisors
Allegations of unsuitable investment recommendations are some of the most common in FINRA arbitration. Under FINRA Rule 2111, brokers must take into account the information in their clients’ profiles when making investment recommendations.
Investor profiles describe the following characteristics:
- Age
- Income
- Net worth
- Investment experience
- Risk tolerance
- Time horizon
- Liquidity needs
This information gives brokers an idea of their client’s financial situation, and is crucial to providing investment recommendations that align with the investor’s goals.
Brokers may recommend unsuitable investments to earn higher commissions or to execute a fraudulent scheme. In some cases, the broker simply fails to adequately research an investment before recommending it.
When Cambridge Investment Research Advisors recommend investments that do not fit an investor’s profile, the resulting losses may support a claim for unsuitable recommendations. A structured account review can help identify whether the advisor’s recommendations matched the investor’s needs, goals, and tolerance for risk.
You can learn more about allegations of Cambridge Investment Research unsuitable investment recommendations here.
John Kurta was totally successful at winning a complete settlement for us, obtaining our principle plus interest as well as having the Brokerage House we sued pay all attorney fees. Very professional and knowledgeable in all aspects of law. Very easy to talk to and very sensitive to client's needs. Highly recommend using his services!- Lou Maiolo
Selling Away and Cambridge Investment Research Losses
Some investors represent their investment losses as “Cambridge Investment Research scams.” This isn’t a legal term, but can express investors’ frustration at their brokers’ failure to recommend suitable investments.
In cases of selling away, a broker recommends an investment not offered by the firm. Cambridge Investment Research conducts due diligence on the investments it offers to ensure that these products are legitimate and to protect investors from potentially fraudulent schemes.
Selling away violates FINRA Rule 3280, which prohibits private securities transactions without firm approval. When a broker sells investments away from their firm, they evade the firm’s supervision, exposing their client to risk.
Brokers may sell away for several reasons:
- Higher commissions
- Involvement in outside business activities, also called OBAs
- Conflicts of interest, such as compensation received from the issuer
- Fraudulent schemes
Arbitration panels will consider how your broker solicited the investment, including the disclosures provided to you, and whether the firm failed to adequately supervise your broker’s activity.
Elder Financial Abuse and Cambridge Investment Research Losses
Elder financial abuse has several definitions and can fall under the jurisdiction of several authorities simultaneously. Many states’ attorney generals have sub-offices dedicated to investigating claims of elder financial exploitation.
Examples of elder financial abuse include:
- Withholding of money or securities
- Misappropriation of funds or assets
- Unauthorized trading
- Use of deceptive or manipulative tactics to gain control of an investor’s assets
FINRA Rule 2165 prohibits the exploitation of seniors by their brokers. It allows firms to place temporary holds on disbursements of client funds or securities if the firm believes an investor is being financially abused or will be in the future.
This rule also requires firms to create supervisory procedures designed to identify signs of elder financial abuse. This is in addition to the supervisory requirements of FINRA Rule 3110. We’ll discuss firm liability under FINRA Rule 3110 in a later section.
For more information on elder financial abuse and Cambridge Investment Research arbitrations, see our page.
Overconcentration and Cambridge Investment Research Losses
Overconcentration violates FINRA Rule 2111 by exposing investors to an unsuitable degree of risk. Risk is inherent to investing, but diversification can reduce this risk to a level appropriate for an investor’s financial situation and goals. By contrast, a severely overconcentrated portfolio can be wiped out by unexpected market swings.
Brokers may overconcentrate their clients in a single:
- Asset, such as stocks
- Industry, such as technology or energy
- Geographic region, such as the United States
Broker fraud investigations involving overconcentration may also find violations of other FINRA Rules. For example, fraudulent schemes may involve excessive concentration in outside investments not approved by the firm.
Whether a case of concentration is unsuitable will depend on how your portfolio became concentrated, your financial goals, and your broker’s communication about risks and strategy.
When Cambridge Investment Research losses are tied to overconcentration, an attorney may compare the account’s actual holdings to the investor’s stated risk tolerance, time horizon, and liquidity needs.
Failure to Supervise Under FINRA Rule 3110
Brokerage firms must comply with the supervisory obligations of FINRA Rule 3110, which requires firms to design systems of supervision designed to detect and respond to signs of broker misconduct.
FINRA Rule 3110 requires firms to meet the following supervisory requirements:
- Establish systems of supervision, including Written Supervisory Procedures
- Enforce these systems effectively
- Appoint supervisors with sufficient training or experience
Failing to conduct regular and thorough reviews of investors’ accounts can cause misconduct to go unnoticed for months. For that reason, investors do not need to prove that the firm had an intent to cause harm in cases of failure to supervise. Instead, investors can argue firm negligence when bringing claims of firm liability.
Common red flags that firms monitor for include:
- High volume trading
- Changes in investor profile
- High cost-to-equity ratio
- Patterns of customer complaints
- Margin trading recommendations
Cambridge Investment Research broker fraud investigations will look for potential violations of FINRA Rule 3110. Stockbroker fraud lawyers familiar with securities regulations and evaluating firm responsibilities can evaluate your case for signs of firm liability.
How Cambridge Investment Research Losses Are Reviewed in Arbitration
Investors often agree to take disputes to FINRA arbitration when they sign brokerage account agreements. FINRA arbitration offers a quicker alternative to civil court, generally resolving claims in 12 to 18 months.
Depending on the specifics of your case, your path to resolution may take longer. Regardless, FINRA arbitration provides a consistent structure for pursuing resolution:
- Filing Your Claim: Your Statement of Claim describes your allegations, applicable FINRA Rules, and your requested damages.
- Firm Response: Cambridge Investment Research and your broker will file an Answer responding to your allegations. This will lay out their defenses against your claim. Firms generally provide an answer in about 45 days after you file your claim.
- Arbitrator Selection: Each party will select one or three arbitrators from a list provided by FINRA. This process typically takes 1 to 2 months.
- Document Exchange: Also referred to as discovery, both parties will exchange documents during this period, including broker-client communications and account records. Discovery usually takes about 6 to 9 months.
- Hearing and Decision: If no financial settlement is offered and accepted, a hearing will be scheduled. During the hearing, both sides can present evidence and call expert witnesses to testify to the arbitration panel. Afterwards, the panel issues a binding and enforceable arbitration award. Hearings typically take place 12 to 18 months after claim filing.
Cambridge Investment Research settlements may be offered during the arbitration process, including during the hearing. However, settlement offers do not indicate liability on the part of the broker or firm.
When Do Cambridge Investment Research Settlements Occur?
Cambridge Investment Research may make a settlement offer at any point in the arbitration process. Firms frequently make settlement offers during the discovery period as they realize the scope of your evidence and the possible firm liability.
Some factors that influence firm settlement offers include:
- Strength of supporting evidence
- Expert witness testimony
- Potential firm liability under FINRA Rule 3110
- Possible negative press
An experienced securities fraud attorney can evaluate these offers for how they address your requested damages and negotiate for a more appropriate settlement.
Strategic Considerations in Arbitration
You can expect your claim to reach resolution in 12 to 18 months in FINRA arbitration. During this process, an investment fraud lawyer can gather evidence for your case, communicate with the other party, and represent your interests during arbitration.
Their experience in identifying fraud and advocating on behalf of investors makes a securities fraud attorney an invaluable ally on your journey to recovery.
Documenting Misconduct
The first step in evaluating your broker fraud claim is a structured account review. Your attorney will scrutinize records such as trade confirmations, strategy discussions with your broker, and your monthly account statements for patterns of misconduct.
Presentation of Evidence
Gathering strong evidence of fraud will provide the foundation of your case, but the effective presentation of it is crucial to proving your claim in arbitration.
Securities fraud attorneys have experience presenting evidence in a logical and persuasive way, using testimony from expert witnesses to prove your claim to the arbitration panel.
Firm Liability Under FINRA Rule 3110
Investment fraud lawyers use their knowledge of securities regulations and familiarity with how brokerage firms work to identify supervisory failures. Proving firm liability can lead to greater damage awards.
However, previous arbitrations or settlements involving other clients do not indicate firm liability in your broker misconduct claim.
Common Firm Defenses to Broker Fraud Allegations
Firms often make the same defenses to claims of broker fraud, such as:
- The investor accepted the risk involved.
- The client was sophisticated enough for their investments.
- Investor’s losses were market-driven.
- The broker provided sufficient risk disclosures.
- Investors knew about and authorized transactions.
These defenses will be tested in arbitration through cross-examination, presentation of evidence, and use of witness testimony. Arbitration panels will consider your financial situation and other important context that can reveal broker misconduct.
From my initial consultation, I felt Jonathan’s firm was the right choice for me. Very professional he was always easy to reach for any questions or concerns I had throughout the process. I am extremely pleased with the results he and his team were able to obtain on my behalf. Excellent law firm!- Janice Homicki
How Arbitration Panels Calculate Damages
The full scale of the misconduct will factor into any damages you are awarded by the arbitration panel. Witness testimony and the logical presentation of your evidence can influence arbitrator’s decisions when deciding damages.
Arbitration panels may use a combination of damage models:
- Out-of-pocket losses
- Commissions and trading fees
- Market-adjusted calculations
- Benchmark performance
- Margin interest and costs
Market-adjusted calculations look at how your portfolio would have performed in the absence of mismanagement and misconduct. Similarly, benchmarks like the Dow Jones Industrial Average may be used to determine how your assets performed compared to the market.
Trading on margin introduces risk, adds fees and interest, and can amplify an investor’s losses, all of which may factor into arbitrators’ damage calculations.
Time Limits Under FINRA Rule 12206
FINRA Rule 12206 requires that investors file claims within six years of misconduct occurring. Though there are some exceptions to this requirement, investors should seek out an investment fraud lawyer for a case evaluation as soon as they suspect broker fraud.
Investors concerned about Cambridge Investment Research losses should not wait to request a review. Delays can make it harder to gather documents, evaluate account activity, and preserve claims within the applicable deadline.
Frequently Asked Questions About Cambridge Investment Research Losses
Click each question below to expand the answer.
Can I sue Cambridge Investment Research for investment losses?
Brokerage firm account opening agreements often contain clauses requiring investors to take their claims through FINRA arbitration rather than civil court. The FINRA arbitration process typically leads to resolution in 12 to 18 months and results in an enforceable and legally binding agreement.
What is the first step in evaluating Cambridge Investment Research losses?
Your first step is reaching out to a stockbroker fraud lawyer for a structured case evaluation. Stockbroker fraud attorneys have experience identifying signs of broker misconduct and advocating for investors in arbitration.
What qualifies as misconduct by Cambridge Investment Research Advisors?
Misconduct by Cambridge Investment Research Advisors may involve churning, unsuitable investment recommendations, selling away, unauthorized trading, misrepresentations, or failure to disclose risks.
What is churning?
Churning occurs when a broker executes an unsuitable number of trades. It also generates fees and commissions that can significantly reduce an investor’s profits.
What is unauthorized trading?
When brokers exercise trading discretion beyond what their client authorized, they engage in unauthorized trading. If you have a discretionary account, you may still have an unauthorized trading claim.
What is failure to supervise?
FINRA Rule 3110 requires firms to create supervisory systems reasonably designed to detect and prevent broker fraud. Firms may be liable for their brokers’ misconduct if they failed to supervise their activities.
Does Cambridge Investment Research have responsibility if a broker acted alone?
In some cases, Cambridge Investment Research may be found liable for its brokers’ actions. Investors may be able to prove failure to supervise under FINRA Rule 3110.
What if I signed paperwork I didn’t fully understand?
You may still have a case even with signed paperwork. A stockbroker fraud attorney can conduct a structured account review and identify patterns of misconduct in your account records, broker communications, and other documentation.
Can I bring a claim if my account was discretionary?
Some investors may still have a claim even if their account was discretionary. Brokers must adhere to the suitability requirements of FINRA Rules 3260 and 2111.
What if Cambridge Investment Research argues that market volatility caused the losses?
Brokerage firms frequently argue that investors’ losses are caused by market volatility. Arbitration panels consider the full story, looking at your financial situation, risk disclosures provided by your broker, and other evidence of misconduct.
Has Cambridge Investment Research settled investor claims?
Investors have received settlement offers from Cambridge Investment Research in allegations of broker fraud. The FINRA Award Database shows recent Cambridge Investment Research awards. Past settlements are not evidence of firm liability.
What is a Cambridge Investment Research settlement?
A Cambridge Investment Research settlement is one potential resolution for your claim. An investment fraud attorney can help negotiate a settlement with the firm. Settlements offered to other investors are not admissions of liability on the part of the firm.
How long does FINRA arbitration take?
Claims taken through FINRA arbitration typically reach resolution in 12 to 18 months, but this depends on the details of your case.
How long do I have to file a complaint?
Most investors need to file their claims within 6 years of the start of the alleged misconduct. It’s crucial for investors to reach out to an investment fraud attorney if they suspect their losses indicate broker fraud.
What evidence strengthens an investment claim?
Broker fraud claims can be supported by account documentation including the investor’s profile, trading records, monthly account statements, and communications between broker and client.
What damages may be recovered from broker fraud?
Arbitration panels may award compensatory damages as well as interest. In special circumstances, you may also be awarded additional relief.
Does calling something a Cambridge Investment Research scam mean fraud occurred?
Frustrated investors may characterize their losses as a “Cambridge Investment Research scam.” A stockbroker fraud lawyer can evaluate your claim and determine if your documentation indicates signs of broker misconduct.
Contact Kurta Law
If you believe your broker may be implicated in your losses, it’s vital to seek out a securities fraud attorney for an account review. The experienced attorneys at Kurta Law have helped investors recover their funds in cases of broker fraud involving a variety of investment products.
Our attorneys can conduct a free structured account review to reveal patterns of broker misconduct, gather evidence to support your case, and ultimately represent you through the arbitration process.
Reach out to Kurta Law today for a confidential case evaluation and discussion of your path to resolution.