Victim of Financial Fraud? Call Now

Do I Need a Securities Lawyer?

Securities Lawyer Jonathan Kurta
By: Jonathan Kurta Author

Have you suffered recent, unexpected losses in your securities account? If you trusted your financial advisor or stock broker to manage your investment portfolio and relied upon them to make appropriate investment recommendations, you should speak with a securities lawyer. A securities lawyer may also be referred to as an SEC lawyer or a stock loss lawyer.

Investors who discover that they have been defrauded by a broker may ask, “Can I sue my broker?”  After some research, investors will discover that most brokerage firms require investors to sign a “pre-dispute arbitration agreement.” This agreement requires investors to file complaints through FINRA arbitration instead of civil court.

The Financial Industry Regulatory Authority (FINRA) administers the arbitration process. FINRA was designed to streamline dispute resolution between brokerage firms and investors. FINRA provides the arbitrators, who are supposed to be neutral third parties to the dispute. FINRA arbitration decisions are binding, meaning that appeal is only possible under extremely limited circumstances.  Because FINRA arbitration awards are binding, you should retain a FINRA attorney to represent you in your dispute with a FINRA member firm.   

Am I Required to Use a Securities Attorney for FINRA Arbitration?  

While you are not required to hire a securities attorney, having a securities attorney should boost your confidence that you will not be bullied by a large Wall Street corporation. And remember – the brokerage firm will have legal representation and experience litigating securities disputes. Neither FINRA nor FINRA arbitrators can provide you with any legal advice.

Securities attorneys can help you resolve your case and advocate for your rights. More importantly, securities attorneys can help you avoid the tricks that investment firms may use to take advantage of you as a pro se litigant (a.k.a. a claimant who represents themselves without a lawyer). For instance, without a securities attorney, brokerage firms may try to persuade you to sign something that will relieve them of any liability for damages. On occasion, securities firms will try to persuade investors to settle for an amount far below the actual damages or the damages that investors may achieve following a FINRA settlement.

Experienced stock loss lawyers will help you litigate and negotiate your FINRA claim. This will allow you to receive the financial recovery that you deserve. Our securities attorneys will argue that you are also owed the cost of your legal fees, as well as loss interest – money your investments would have earned, had your investment portfolio been properly managed.

Unscrupulous brokers or brokerage firms may also argue that you signed something that precludes any possibility of recovery. For instance, you may have signed a document acknowledging that you knew there were risks associated with an investment. These types of “CYA” agreements do not always hold up under careful legal scrutiny. A stock lawyer can argue that these agreements are often deceptive, not binding, and should be questioned in light of a securities firm’s history of defrauding its investors.

Can I Use My Regular Attorney for a FINRA Complaint?

Securities law is a highly specialized arena of law. Attorneys that handle other areas of law will not be as effective as securities attorneys at navigating the FINRA arbitration process. In FINRA arbitration, a panel of arbitrators serves as the judge and jury for your case. Stock lawyers serve as useful guides in this unfamiliar territory.

Like a civil trial, arbitration includes a discovery process and a hearing. However, the discovery process for FINRA arbitration is much different from a civil proceeding, and securities attorneys are experts on what is permissible under the FINRA Code of Arbitration Procedure.

Your stock loss lawyer will also be familiar with the rules and regulations imposed by the financial industry regulators – FINRA and the SEC. Having an SEC lawyer will ensure you are well-prepared.

Securities attorneys also know when arbitration is not the best course of action for their investors. Investors may opt for FINRA mediation, which settles more quickly than arbitration. Your stock lawyer can help determine if mediation is the best choice for your circumstances.

What if I Want to Avoid Getting My Stock Broker in Trouble?

Your losses may not exclusively be your broker’s fault. Firms approve each of the investments that their brokers are allowed to recommend. In some cases, the firm is largely to blame for approving a product that came with clearly excessive risk. Often it is the brokerage firm and not the broker that pays for the losses associated with an unsuitable investment.

Types of Cases Securities Lawyers Handle

Most securities fraud cases involve brokers recommending investments that were too risky for their clients. Overly risky investments include investments in companies without significant operating history, use of leverage (borrowed money), or a hit-or-miss investment, such as a speculative oil drilling endeavor. Investments like private placements and non-traded REITs come with high risk because they do not have to make their financials public.

These types of investments may violate FINRA Rule 2111, also known as the Suitability Rule. FINRA requires that brokers only recommend investments that suit their investor’s needs. You should speak to an SEC lawyer if your broker did not explain that you were at risk of losing a significant portion or all of your investment.

Security Lawyers Do Not Tolerate Financial Elder Abuse

Relatives of elderly investors may need to speak with a securities lawyer if they believe their loved one may be the victim of elder financial abuse. You may also need a security lawyer if you are the beneficiary of an account that you believe may have been mismanaged. Unfortunately, elder abuse is a common problem in the financial industry, and vulnerable investors should use a stock lawyer to advocate on their behalf.

One type of common elder abuse is churning, also known as excessive commissions or commission abuse. When a broker churns an account, they purposefully execute too many trades for the express purpose of generating more commissions for themselves.

Is Hiring a Securities Lawyer Expensive?

If you do need a stock lawyer, you do not need to worry about payment right away. Stock lawyers can help with the very earliest stages of a dispute when investors are still deciding if they have a case. Most investment lawyers work on contingency, meaning they get paid a percentage of your settlement once the case has settled. Kurta Law securities attorneys offer free case evaluations.

Even if another securities attorney told you that you do not have a case, you should contact Kurta Law for a free case evaluation. Our attorneys have helped investors who have been turned away by other stock lawyers.

Securities Lawyer Jonathan Kurta
Written by: Jonathan Kurta

Jonathan Kurta is an accomplished securities attorney and a founding partner at Kurta Law.