Banner Attorney Image
Stands Up to The Insurance Companies to Protect Your Rights REQUEST A FREE CONSULTATION

Georgia Securities Fraud Lawyers

Were you the victim of securities fraud? Did your trusted brokerage firm, financial advisor, or another person responsible for managing your money engage in illegal activity that resulted in your financial losses? If so, contact Chris Hudson Law Group right now to discuss the legal options available to you.

As an investor, you probably rely on your financial advisor or brokerage firm to handle your accounts. You believe you can trust them to keep your best interests in mind, but their deceptive practices could end up costing you a lot of money.

At Chris Hudson Law Group, we understand the adverse effects of securities fraud on your finances. When someone mismanages your accounts, you could suffer a range of losses involving mutual funds, stocks, bonds, real estate, and other investments. You should not be forced to face the financial consequences of another person’s dishonest actions.

Securities fraud includes a range of illegal activities. When you find yourself the victim of your stock broker’s misconduct, you could lose the life savings you worked so hard to build and face significant debt. The Georgia securities fraud lawyers of Chris Hudson Law Group could represent you in your case and help you hold the party who committed the fraud accountable. Call us for a free consultation at (706) 690-4613 today.

Common Types of Securities Fraud

The Securities and Exchange Commission (SEC) regulates everyone in the securities industry. They require that investors receive fair treatment and prohibit brokerage firms and other similar parties from engaging in misrepresentation, deceit, and other types of fraud while selling securities to others.

According to the Securities Act of 1933 and the Securities Exchange Act of 1934, securities fraud, also referred to as investment fraud, occurs when someone willfully engages in acts of deception to persuade investors to make investments based on misinformation or to manipulate financial markets. Securities include bonds, investment contracts, stocks, commodities, and other types of investments.

The most common types of securities fraud include:

Bond Fraud and Misconduct

Firms sell bonds to investors to help them raise capital. Examples of misconduct in this arena might include:

  • Failing to disclose the risks associated with certain bonds
  • Concealing charges associated with the bond
  • Marking up the actual cost to increase the firm’s fee for selling the bond
  • Recommending a junk bond

Selling Away

Selling away involves selling private securities that aren’t included on a broker’s product list or that they don’t have the authority to sell. Common unauthorized securities include:

  • Real estate
  • Investments in privately-held companies
  • Limited partnerships

An advisor might also sell away an investment for their personal interests, meaning they received a commission but didn’t disclose that information to the investor.

Unauthorized Trading

Unauthorized trading occurs when a broker or investor uses your nondiscretionary investment account for transactions without obtaining your permission. This can cost the investor money but benefit the advisor because they receive a commission for every transaction.

Investment Fraud and Misconduct

Some brokers will engage in unethical practices by scamming the investor. Common schemes include:

  • Ponzi schemes
  • Junk bonds
  • Non-Traded Real Estate Investment Trusts (REITs)
  • Variable annuities

Churning and Excessive Trading

Churning involves regularly selling, purchasing, or turning over your portfolio for personal gain. A financial advisor will generate commissions by making excessive transactions through your investment accounts without considering the negative impact it can have on your finances.

Failure to Supervise

Firms must supervise their brokers and advisors. Supervision can involve reviewing your portfolio regularly to ensure it meets your risk tolerance and investment objectives. If there are any red flags, they must notify you of the potential risks you face with your investments. They’re also supposed to inform you of losses due to an employee’s fraudulent misconduct.

Breach of Fiduciary Duty

Financial advisors will advise their clients on how to allocate their assets and where they should invest their money. The advice they give should meet the investor’s needs based on their:

  • Age
  • Employment status
  • Financial objectives
  • Risk tolerance

A breach of fiduciary duty occurs if the advisor acts against their client’s wishes or recommends investments that don’t meet their needs.

Variable Annuity Issues

Variable annuities can pay a broker a higher commission than other securities. That might result in a broker advising their client to purchase an annuity by misrepresenting the information or withholding the risks they could face.

Margin Trading

Margin trading involves an investor using securities they already own as collateral to borrow money from a broker-dealer to purchase stocks. Even though it might not be in their client’s best interest to participate in margin trading, a broker can generate commissions using this practice. Some will misinform the investor of the risks and recommend margin trading despite not meeting their financial objectives.

Broker Omissions and Misrepresentation

Federal securities law requires a firm to disclose any conflicts of interests or risks to their investors. Before approving transactions with their accounts, clients need this information, but the advisor could withhold material facts, resulting in financial losses for their client.

If you suffered financial losses from any of these or another type of securities fraud, do not hesitate to contact Chris Hudson Law Group. You deserve quality legal representation against the individual or entity that wronged you.

What Is FINRA Arbitration?

Arbitration involves resolving civil claims without going to court. Instead of arguing your case in front of a jury or judge, a panel of arbitrators reviews evidence of securities fraud from opposing sides and rules in favor of one of those parties.

You might not know about this, but many brokerage client contracts contain a provision that requires you to go through arbitration instead of court proceedings if there is a dispute with your financial advisor. If you want to seek compensation for your losses, you must follow regulations under the Financial Industry Regulatory Authority (FINRA).

FINRA regulates the sale and purchase of securities by investment firms and other professionals. This organization also protects investors from fraudulent practices by their brokers or financial advisors. Resolving your dispute through arbitration is mandatory if you signed a contract with a standard arbitration clause.

You might not understand the steps involved in an arbitration. It can be a complex procedure. That’s why it’s critical to hire an experienced Georgia securities fraud lawyer immediately to help you with your case.

First, you must file a Statement of Claim to start the arbitration process. The statement should include the name of the at-fault party, a description of what happened, and how much money you’re seeking. You should also submit documents supporting your claim to FINRA.

Another requirement is to file a Submission Agreement and the necessary fees listing all parties involved in the case and confirming that FINRA will be an administrator. It also establishes that each party agrees to comply with the panel’s decision if there’s a hearing to resolve the matter.

Once FINRA receives all the documentation, they will serve the statement to the parties you listed. The respondent must file their answer to the specific information included in the statement and defend their position. Arbitration selection will begin after that, and the number of people on the panel will depend on the type of case, the size of the claim, and other factors.

A prehearing conference will follow to schedule the hearing dates between both parties and the arbitrators and resolve any initial issues. The attorneys on both sides can gather evidence and request copies of what the other parties have found during their investigation.

The attorneys representing opposing parties will start with opening statements and present evidence to prove their case during the hearing. They might also call witnesses to provide testimony on their client’s behalf. Each attorney will have an opportunity to cross-examine these witnesses. Closing arguments conclude these proceedings, and at that time, the arbitrators will deliberate to determine their ruling.

The panel doesn’t have to make a unanimous decision. The decision can be the result of a majority vote. They will have up to 30 days to issue an award. FINRA will send copies to you and the investment firm and indicate whether you’re owed compensation for your losses. If you are, the at-fault party must pay the amount listed.

Alternative Options to Arbitration

If you want to avoid arbitration, you could ask the opposing party if they’re willing to resolve the case through mediation. However, moving forward with this process does not mean you give up your right to pursue arbitration down the line if you can’t reach a favorable agreement.

During this process, the opposing parties will voice their issues and listen to the other side to understand their position. The mediator’s job is to guide both sides towards a mutually acceptable resolution. At some point, you might move to a separate room so the mediator can relay messages, demands, offers, counteroffers, and proposals between you and the opposing party.

If you settle, you must draft a written agreement and sign it. The mediator can help you with this part of the process. They will include the terms of the agreement and other relevant information in the document. The settlement might require the investment firm to reimburse you for the money they stole or pay a specific amount to compensate you for some of your losses.

If you and the opposing party reach an impasse, that means one or both of you have decided not to settle the case. You could proceed with arbitration at that time if you still wish to pursue compensation.

Contact Us

At Chris Hudson Law Group, our Georgia securities fraud lawyers have represented clients like you for over 15 years. We can help you hold the brokerage firm or advisor accountable for their misconduct and seek the compensation you deserve.

If you suffered losses from securities fraud, call Chris Hudson Law Group right now for a free consultation at (706) 690-4613.

Last Updated : October 4, 2021