When to Contact a Securities Defense Attorney

When to Contact a Securities Defense Attorney

A lot of things can go wrong when you handle other people’s money. Even when the risks are apparent, the investor who suffers losses (no matter the reason) rarely has warm and fuzzy feelings for the person whom they perceive to have presided over the trades.

It’s no wonder then that registered representatives (a.k.a stockbrokers), financial advisors, financial planners and the firms that employ them are frequent targets of arbitration and/or litigation from former clients. Whether the accusation has merit or is nothing more than sour grapes, the financial professionals that are named in the suit may require legal representation. Even if your firm offers to handle it or pay for your defense, conflicts exist and you should have your own advocate watching out for your best interests. That goes double when the case involves one of the following watchdog groups.


From Junk Bond King Michael Milken to TV personality Martha Stewart, the U.S. Securities and Exchange Commission (SEC) has been involved in some of the most notorious securities misconduct cases in history. An agency of the federal government, the SEC has the power to bring civil charges against investors and brokers alike. If you’re a financial professional and you receive a call or a visit from a representative of the SEC, you’d be well advised to contact an experienced securities defense lawyer as soon as possible and to let the SEC know that your attorney will respond for you.


Despite the fact that it is a private, self-regulatory organization that does not have the power to charge stockbrokers or broker-dealers in court, the Financial Industry Regulatory Authority (FINRA) can be just as fearsome as the SEC due to their ability to discipline stockbrokers and firms as members. This organization does have the authority to investigate accusations of broker misconduct, review them and bring disciplinary actions against both individuals and firms.

Individual States’ Securities Departments

All U.S. states have their own securities divisions that handle customer complaints and register securities that will be sold within the borders of that state. These often small state divisions can also share information with much larger regulatory agencies like the SEC.

Types of Broker Misconduct

When an investor files a complaint with one of the aforementioned agencies, it often falls into one of the following categories:

  • Excessive Trading:  Also known as churning, this illegal practice is used by unscrupulous brokers to generate commission fees through buying and selling that’s not in the best interest of the client.
  • Unauthorized Trading:  Just as it sounds, unauthorized trading occurs when a broker makes trades on an account its owner did not approve prior to trading.
  • Misrepresentation/Omission: When a broker omits vital facts or simply lies about an investment he recommends to a client, he may be guilty of this offense.
  • Negligence. Although somewhat open to interpretation, a broker-dealer may be charged with negligence if he failed to abide by the standard of care and that lead to financial harm to the customer.

Why Call a Securities Defense Attorney?

Whether you’re liable or not, odds are you’ll be anxious and afraid after being accused of broker misconduct. After all, these kinds of claims are serious business. Stockbrokers have lost their jobs, their licenses, even their freedom in criminal cases.

It’s also important to note that even if you are exonerated, these accusations can follow you around for the rest of your career. The best way to protect your name, reputation and hard earned dollars is to hire an experienced securities lawyer that knows the law, the industry and its process inside and out.

Depending on which regulatory group files charges against you, you could be headed to court or to an administrative hearing. Whether an administrative, civil or criminal case, the opposition may marshal teams of accountants, experts, lawyers and regulatory officials to question you about the allegations.

Even if you have absolutely nothing to hide, it is imperative that you retain legal counsel before you answer questions or attempt to resolve matters. An experienced securities defense attorney will make certain that you put your best face forward and avoid making any statements that may compromise your case.

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