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Sales Practice Violations

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Introduction

When you entrust your financial future to a broker, financial advisor, or investment firm, you have the right to expect ethical behavior and sound advice tailored to your investment needs, and retirement goals.. Unfortunately, not all advisors adhere to the high standards required in the financial industry. When they fail to do so, it can result in significant financial harm for their clients. If you believe you have been a victim of unethical sales practices, it is crucial to consult with an experienced attorney.

At Girard Bengali, APC, our team of securities attorneys is dedicated to representing investors who have been wronged by sales practice violations. We have a proven track record of recovering substantial damages for our clients in both straightforward and complex cases. Our deep understanding of the financial industry allows us to effectively pursue claims against advisors who have engaged in improper sales practices of all kinds.

Understanding Sales Practice Violations

Sales practice violations occur when brokers or advisors breach industry regulations, firm policies, or their duties to clients. These violations can take many forms, each with the potential to cause significant financial losses. At Girard Bengali, APC, we have successfully handled a wide range of sales practice violation cases, including:

Unauthorized Withdrawals

Brokers may steal from clients by making unauthorized withdrawals or transfers from their accounts. This can involve transferring funds to the broker’s personal accounts or to third parties without the client’s knowledge or consent.

Churning

This occurs when a broker excessively trades in a client’s account to generate higher commissions, rather than to benefit the client’s investment objectives. Churning is a clear violation of the advisor’s duty to act in the client’s best interest.

Misrepresentation or Omission

Advisors are required to provide accurate and complete information about investment products. If your advisor has misrepresented an investment or withheld critical information, you may have grounds for a legal claim.

Unsuitable Investments

Advisors must recommend investments that align with your financial goals, risk tolerance, and overall investment strategy. Recommending unsuitable investments for the sake of earning higher commissions is a common example of a sales practice violation.

Unauthorized Trading

Any trade made without your express permission, unless you have given your advisor discretionary authority, is a serious violation. Unauthorized trading can lead to unexpected losses and is often indicative of broader misconduct.

Failure to Diversify

Advisors are expected to diversify investments to reduce risk. Also known as securities concentration, allocating too much of your portfolio to a single investment or sector can lead to significant losses if that investment performs poorly.

Selling Away

This occurs when an advisor sells an investment product that is not offered or approved by their firm, often to avoid oversight. Selling away is not only a violation of industry standards but can also expose clients to high-risk or fraudulent investments.

Negligence

Failure to exercise the standard of care expected in managing a client’s investments, resulting in financial harm due to careless actions or omissions, such as inadequate research, poor portfolio management, or neglecting market conditions.

Margin Calls

Improper handling or failure to adequately advise clients on the risks of margin trading, leading to forced liquidations and significant losses when account equity falls below required levels.

Failure to Supervise

Inadequate oversight by a brokerage firm, allowing brokers or financial advisors to engage in unethical or illegal activities, resulting in investor losses due to lack of proper supervision and enforcement of compliance procedures.

Excessive Markups/Markdowns

Charging clients inflated prices (markups) or paying them unfairly low prices (markdowns) for securities transactions, resulting in unjustified profits for the broker at the client’s expense.

Private Placements

Involvement in the sale of private securities offerings without proper disclosure of risks or conflicts of interest, potentially leading to significant financial losses for investors who were not fully informed.

Protecting Your Rights and Recovering Losses

Being the victim of sales practice violations can have a devastating effect on your financial well-being and retirement plans, but there are well-defined avenues of legal recourse that may allow you to recover part or all of your losses. The attorneys at Girard Bengali, APC, are well-versed in securities laws and have the experience to help you navigate the complexities of your case. Whether through arbitration or litigation, we are committed to holding advisors accountable and securing the compensation you deserve.

Contact Our Attorneys to Discuss Your Legal Options Regarding Sales Practice Violations

If you suspect that you have been a victim of any of the above sales practice violations, it is essential to act quickly. The sooner you consult with our team, the better we can protect your rights and pursue your claim. To schedule a confidential consultation with our securities attorneys, please call 866-778-6821 or contact us online. We are ready to fight for your rights.

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