Sue your stock broker
In theory, if you have lost money because your broker or any financial institution gave you bad advicemismanaged your investments, misled you in any way or did various other unlawful and ethical things, you can sue for damages. If these breaches of duty are provable, the "merits of the case" are strong, as a lawyer would say. Unfortunately, these merits may not be enough to get you fair compensation with a fair amount of financial outlay.
No matter how good the case, the road to financial damages is a rocky one. The Theory and the Reality In an ideal world, if you have a good case, you or your lawyer would write to the broker explaining the situation and requesting that he or she pay a certain amount of compensation or make a fair offer. The broker would face the realities of the situation and act with integrity, offering you a reasonable sum. Unfortunately, we do not live in an ideal world and nothing makes a broker's blood run cold or perhaps hot more than a damages claim.
The amount of money involved is generally not trivial and there is often a fear of "the floodgates opening," as you are probably not the only client in this position. It is also human nature that people are reluctant to admit they are in the wrong, no more so when this affects their pocket.
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So What Actually Happens? In many or most cases, the broker will deny absolutely everything with arguments that will make your own blood either boil or freeze. The defenses will range from blaming you, the market or both, to distorting the figures or the laws, the logic or anything else that shifts the liability for the losses away from the broker.
Do You Dare Sue Your Broker? | Investopedia
This first response will generally be presented as one of injured innocence. If you push further, it will get nasty. Despite legal and ethical obligations to treat complaints fairly, this is also a theoretical ideal that is often totally disregarded in practice. The unstated and sole objective of the broker is to avoid or evade liability by any means available. Do not, therefore, expect fairness or sympathy and understanding; the firm will regard you as an enemy and treat you accordingly.
You will be told that "our position is clear," which means "we will admit nothing and offer nothing, and if you want one dollar back then sue us, if you dare. Why It Would Indeed Be Daring The odds are stacked against you, especially if you are dealing with a large firm.
Such cases are often complex, invariably very time consuming and truly draining on all one's resources - financial, mental and physical. The other side can and will run up massive legal fees, and if you back out part way you will owe them a frightening amount of money. The fees accruing on the other side are the real problem; they are used as a strategic weapon.
The theory is that judges are infallible and if you lose, you were in the wrong, deserve no damages and should therefore pay the costs of the other side. It is also common for the other side to try and avoid the real issues and merits of the case from ever being discussed openly and fairly. Thus, the civil process itself gets misused bureaucratically, through various administrative tricks and processes, while the actual financial mismanagement is either not dealt with at all, or simply denied validity.
Furthermore, the less of a case the firm has, the more they will resort to such tactics. The other side will probably believe it has a better chance of escaping liability by mismanaging your complaint and manipulating or taking its chances with the civil system than dealing with you fairly out of vega in fx options, especially if you are in the right.
In addition you can still lose in court because the judge gets it wrong or the broker hires legal and financial "experts" who manage to convince sue your stock broker incorrectly that the merits of the case are weak. There are a lot of financial people out there who will testify to anything for a not-so-modest fee.
Justice is definitely not always done, hence the saying "on the high seas and in court, you are in God's hands. The ugly reality is that investors generally lose money because the investment was too risky, but trying to get damages out of the broker or firm is also fraught with financial and other risks.
This all sounds daunting and rightly so. The emphasis must be made that you can still win, but you need to be aware of the harsh realities.
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Litigation, just like investments, can be missold. On the Other Hand how to make money from google adsense If you are not dealing with a big firm, there is a far more level playing field and you have a much better chance.
Likewise, if you have legal insurance that will cover most of the cost, you can proceed more easily. It is also sometimes possible to get "after-the-fact insurance," which is not cheap, but it does mean your potential losses have a ceiling.
The Bottom Line A financial damages claim is not for the fainthearted, but it may be worth it in the end. Make sure you think things through very carefully before the cost "clock" starts ticking away, and bear in mind that you will probably not get objective advice from a lawyer who is keen to sell or missell litigation.
Sue your Stockbroker
Suing a large firm is certainly difficult, but it is not impossible and it may be worth trying. The more level the playing field in terms of resources, the better your chances. Either way, the unfortunate reality is that litigation is an investment in itself, with its own risks and rewards.
There are substantial costs involved, both financial and non-financial. All these factors need to be weighed up in advance and a sensible decision made. In some cases, it is better to live with the losses. Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund.
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Do You Dare Sue Your Broker? By Brian Bloch Share.
It is not uncommon for investors to lose money through misselling or other forms of mismanagement. Tempting as it is to pass the buck for your losses, the true culprit may be closer to home. Learn the clues you'll need to determine whether you've chosen a reputable professional. Make sure you're getting the best service by staying informed and involved. Before you blame your advisor for your losses, be sure you know your rights and responsibilities.
Investment companies and brokers want to sell.
Unfortunately, this can result in promotional material that is not entirely frank, or far worse, truly misleading. If you're a rookie investor, your first big investment decision should be an informed one. Read about how to choose your first broker here. Should you leave it all up to your broker or take the reins yourself? Striking a happy medium will provide the best returns.
Investors tend to be adventurous in situations where they feel protected, but risk compensation theory suggests this may backfire. We examine the less obvious ethical dangers faced by a broker, and help you avoid trouble in ethical gray zones. An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.
A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over No thanks, I prefer not making money.
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