You sacrificed, scrimped and saved, but now that sacrifice seems meaningless: Your nest egg, life savings or college fund is gone. If you have been defrauded by a financial professional, the experts in securities litigation at KNDK can help.We are dedicated to representing consumers and victims of fraud. We have recovered millions of dollars for defrauded investors in securities lawsuits and arbitration proceedings. We represent individual investors, trusts, pension plans, and insurance policyholders. We believe that Americans who lose their savings due to the fraudulent actions of securities firms deserve the highest quality of legal representation.
Select one of our specialty areas in securities litigation:
- Churning or Excessive Account Trading
- Material Misrepresentations or Omissions
- Breach of Fiduciary Duty
- Unauthorized Trading
- Subprime Mortgage Bonds
- Auction Rate Securities
- Securities Arbitrations
- Other Areas
CHURNING OR EXCESSIVE ACCOUNT TRADING
- Churning is also defined as excess trading in a customer’s account for the purpose of generating commissions for the broker’s financial benefit. In order to prove churning, a customer must prove that the broker had control over the account, that the trading was “excessive” given the customer’s investment objectives, and that the broker acted recklessly (or intentionally) with the intent to benefit himself to the detriment of the customer. In order to establish “control,” a customer must show that the broker was making the investment decisions, whether the account is discretionary or non-discretionary.
- Diane Nygaard has represented investors from many states and other countries in securities arbitrations against their financial advisors, stockbrokers, or money managers. These have included cases involving millions of dollars of losses due to churning, Ponzi schemes, improper investment of retirement plans, and other types of securities fraud. She has taken many cases to arbitration, and has won compensatory damages and punitive damages for her clients. The most recent such victory, in June 2010, was against E*TRADE for a group of investors who had been sold auction rate securities. The FINRA arbitration panel awarded them all their losses, attorneys’ fees and costs against E*TRADE. E*TRADE had sold all the investors auction rate securities by misrepresenting them as safe and liquid. Click here for the E*TRADE Arbitration Award.
MATERIAL MISREPRESENTATIONS OR OMISSIONS
- Under most states’ securities laws, as well as the Securities Exchange Act of 1934, a broker may be liable to a customer if (s)he intentionally or recklessly misleads an investor or fails to disclose material facts about an investment
- These claims are often decided on three different issues:
BREACH OF FIDUCIARY DUTY
- In many states, and in certain circumstances, stockbrokers and financial advisors owe their clients the duty of a fiduciary, which is defined as a duty of utmost good faith, integrity, and loyalty.
- Registered Investment Advisers and ERISA plan administrators owe their clients a fiduciary duty under the laws that govern their activities.
- A broker or financial advisor must have a reasonable basis for believing that an investment recommendation is appropriate for the customer based on his or her investment objectives.
- The NASD and NYSE require brokers to “know their customer,” which includes knowledge of the customer’s risk tolerance, other investments, net worth, financial needs, and investment objectives.
UNAUTHORIZED TRADING AND FAILURE TO FOLLOW INSTRUCTIONS
- These claims usually involve a broker trading in a customer’s account without the customer’s knowledge and/or permission. In a securities account where the customer has not given the broker permission to make trades in the account, if the broker makes a trade without obtaining permission, the broker may be liable for losses related to the trade.
- These claims require the customer to be diligent in reviewing account documents, such as statements and confirmations, because the statute of limitations often runs from the date the customer receives these documents.Examples of stock broker misconduct include:
- unsuitable recommendations, including brokers who over-concentrated their customers’ accounts in high-tech stocks;
- mutual fund switching;
- the improper use of margin to increase the buying power of an account;
- pension and retirement account mismanagement;
- stock manipulation and pump and dump schemes;
- day trading fraud, internet scams, and pyramid schemes; and
- insurance company pricing and sales practices fraud
SUBPRIME MORTGAGE BONDS
- Many investors have been sold bonds or bond funds that invested in subprime mortgages. These investors have suffered significant losses in these “low risk” or “AAA rated” investments.If your bond or bond fund has recently declined in value, you may have rights against the issuer and/or the financial professional who sold the investment to you. As with pursuing any legal claim, you should act quickly to preserve any rights you may have. Complete the form below if you would like an attorney to contact you to discuss your rights, or you may call our firm to speak directly with an attorney at 816.531.3100 or 888.469.5544
AUCTION RATE SECURITIES
- One of the most recent forms of investment fraud has been in auction rate securities (ARS). Financial institutions sold these investments to individuals as being highly liquid and stable equivalents to cash; however, because of the liquidity stresses these same financial institutions are experiencing, the auction markets (which determine the price/interest rates on the ARS) have been failing.As a result, individual investors have been saddled with investments that, at least for the short-term, are worthless. Some financial institutions have even started to significantly discount the value shown on account statements for the ARS in clients’ portfolios. Investors are learning the hard way that these investments are neither as liquid as cash nor as stable as cash.Various acronyms for Auction Rate Securities have been used. For example, while “ARS” is a general acronym for Auction Rate Securities, similar securities issued by municipalities are also known as “MARS”, and those that issued by originators of student loans are also known as “SLARS”. Some closed-end mutual funds have also issued “ARPS” (Auction Rate Preferred Securities).Diane Nygaard has settled several auction rate securities cases against E*TRADE, Raymond James, Commerce Bank, and UBS. Our clients have been compensated in the total amount of their purchases of ARS and ARPS and attorneys’ fees. We also have pending arbitrations involving consequential damages due to the failure of the ARS market, which ruined clients’ businesses because they could not access their “safe, liquid” cash.
The following articles discuss some of the issues related to Auction Rate Securities: (Select each for more detail)
- – Stephen Taub, Another Firm Gets Tangled in ARS Web, CFO.com (May 28, 2008).
- – Julia Browne, A Ray of Hope in Auction Rate Securities – An Interview with Diane Nygaard, LawyersandSettlements.com (May 10, 2008).
- – Michael B. Marois and Jeremy R. Cooke, Auction-Bond Flops Stick Student-Loan Holders with 0%, Bloomberg.com (April 25, 2008).
- – Paul Wenske, Use Caution with Auction Rate Certificates, The Kansas City Star (April 26, 2008).
Other Types of Securities Fraud:
- Principle – Protected Notes
- Private Placements
- Mutual Fund Fees
- Ponzi Schemes
- Small-Cap Stocks