Tips And Pointers: Successfully Pursuing Stock Brokerage Firms In Connection With Investment Fraud Cases Filed In Court Or Through FINRA Arbitration

Brokerage Firms Can Be Held Responsible For The Sale Of “Bad Investments”

Under the doctrine of “respondeat superior,” the negligence of an employee may be attributed to the employer.  Numerous courts, along with the U.S. Securities and Exchange Commission (SEC), have held securities brokerage firms accountable for the negligence of an employee, provided the underlying conduct fell within the course and scope of employment (which can be quite broad).  Significantly, a claim of ignorance may not operate as a viable defense.  Under “apparent agency” principles, liability may be imposed on broker-dealers (brokerage firms) by virtue of a mere appearance of authority.  Securities industry firms can also be held accountable for losses that have been sustained based on “control person” liability provisions featured within both federal and state securities acts.

Brokerage Firms Are Required To Vigorously Supervise Stockbrokers

Federal and state law requires brokerage firms to stringently supervise their financial advisers.  As a means of discharging this obligation, brokerage firms must vigorously and aggressively monitor and review the communications of their registered representatives.  This supervisory responsibility encompasses the review of all stockbroker correspondence with investors (including emails, written letters, faxes, and text messages).  Plainly stated, such a demanding, intense level of oversight is required by state and federal regulations, together with FINRA rules, so as to prevent stockbroker misconduct from adversely impacting members of the investing public.  Diligent supervision and oversight play a key role in the ongoing fight to protect the interests of investors.

Based on the costs that are incurred in connection with the implementation and maintenance of a vigorous, diligent supervisory system, scores of brokerage firms have consistently sought to “cut corners.”  In many instances, firms have placed so many responsibilities on supervisory and compliance personnel that it is nearly impossible for those individuals to fulfill the full range of obligations they must shoulder.  Under these circumstances, “red flags” are often missed.  When that occurs, customer protection is sacrificed for the sake of short term profits.  Fortunately, however, state and federal legal principles can coalesce so as to impose civil liability on brokerage firms in this type of setting.

Liability Of Brokerage Firms When “Outside Investments” Are Sold

Frequently, unscrupulous promoters secretly approach stockbrokers as part of an attempt to entice them to offer a specific financial product to their established customers.  These overtures are usually rejected.  Regrettably, however, that is not always true.  With their sights trained squarely on the receipt of handsome commissions, brokers occasionally accept such invitations.  Regardless of any justification that may be offered by a particular broker, these dynamics present grave dangers to customers.  They expose investors to enormous risks.  In that regard, customers are not apprised of the brokerage firms’ lack of involvement; and they naturally assume that the broker-dealer has thoroughly vetted the underlying investment product.  Tragically, few, if any, “due diligence” efforts are actually undertaken in this type of setting.  And, all too frequently, it is only a matter of time before the investment implodes.  On a realistic level, the brokers are victims; they have been deceived by the dishonest tactics of the promoter.  But, the brokers who get sucked into these scams scarcely deserve any sympathy.  Decades of precedent have made it clear that such fact patterns are fraught with peril.  Over the years, financial consultants have been told to avoid any and all scenarios of this nature.  Securities industry professionals uniformly understand that they are concretely prohibited from selling securities in this type of setting.  And yet, such conduct (which is often termed “selling away”) continues to unfold, week after week, month after month – as brokerage firms well know.

In a selling away case, a brokerage firm can be held liable for the losses that are sustained through the sale of such an “outside investment.”  In all probability, no securities transaction would have taken place if the brokerage firm had been fulfilling its supervisory obligations.  Succinctly put, if the broker-dealer had been doing its job, the problem would have been detected, in all likelihood.  At that point, an alarm would have sounded and the process would have been brought to an immediate halt.

Benefits Of Speaking With A Securities Lawyer

If you have sustained losses on account of negligent, reckless, or fraudulent conduct that has been exhibited by a stockbroker or an investment adviser, you may be in need of a securities law attorney.  While assessing questions relating to the lawyer who will best represent your interests, it is important to keep in mind that most lawyers gear their practice toward a specific area of law.  For example, some lawyers may focus on criminal cases, while others devote the bulk of their time and attention toward the representation of insurance companies facing PI (personal injury) claims.  Based on those considerations, you may find that it would be prudent to retain an attorney who possesses an immense amount of knowledge and experience in the securities fraud area.

Chris Bebel is an accomplished, highly respected securities litigation attorney who has achieved tremendous success in the court room, along with the securities arbitration arena.  Stated otherwise, unlike many securities arbitration attorneys, Mr. Bebel possesses a hefty amount of trial experience.  Plus, he is a published author and a superb speaker who has been asked to make presentations from coast-to-coast.   And, given the level of expertise he maintains, Mr. Bebel has been retained by numerous securities lawyers in connection with an effort to build a stronger case.

All things considered, Mr.  Bebel should be viewed as a Texas investors attorney who has targeted financial adviser fraud in Texas for many years.  Extending the analysis further, it is important to understand that Mr. Bebel does not limit his securities fraud practice to Texas.  Mr. Bebel has successfully pursued scores of financial adviser fraud cases across the country.  Suffice to say, Chris Bebel is a highly experienced, well-respected securities lawyer who has repeatedly distinguished himself in connection with numerous stock broker fraud cases situated throughout the nation.

Significantly, Mr. Bebel does not work alone.  He generally works in tandem with Jarom Tefteller.  Together, they make a formidable team.  Working in conjunction with one another, they strive to fight securities fraud in Texas.  They consistently strive to protect Texas investors.

If you are in need of a securities fraud attorney who possesses a robust level of knowledge, experience, skill, and expertise, reach out to Chris Bebel.  Initial consultations are cost free.  Mr. Bebel is a highly qualified investment fraud attorney.  Plus, he is surrounded by a group of dedicated professionals at Tefteller Law, PLLC, a superb securities law firm.