Mistakes Investors Make

Many investors accidentally hurt their cases after they discover wrongdoing. We advise instead that you contact an attorney immediately to help you recover the funds you lost.

We recommend that you do not write to the brokerage firm on your own since it can end up hurting your case. Brokerage firms often suggest writing a letter when an investor complains, but the brokerage firm’s lawyers will use the letter in court or arbitration hearings to limit the amount of money in dispute. You shouldn't write a letter unless you are certain of the amount you have lost and what your claims are. Even sophisticated investors are usually unskilled in this type of endeavor; a securities lawyer's expertise is generally required to craft a formal complaint in the appropriate venue.

Recorded conversations are also bad. Brokers are often coached on what to say in a recorded conversation with their clients and to move the discussion to get the client to say things favorable to the brokerage firm. It is also illegal in some states.

E-mails can also be a problem since whatever is written in an e-mail will later be used against you in an arbitration proceeding. The general rule is: the less communication with the broker and brokerage firm, the better. Hire an attorney to communicate for you.

Another mistake it to continue to check your account and actively manage it once you suspect something is wrong.

This is a common behavior. The brokerage firm can track your log-ins and will use frequent checking of your account as evidence that you are a sophisticated investor. It weakens your cases in an arbitration hearing. Likewise, continuing to deal with your broker after you suspect something is wrong can only hurt you.

Brokerage firms are large companies. They have plenty of money and plenty of employees. They use the brokers' personal relationships with clients to stall client complaints. They count on this personal relationship to prevent lawsuits. The broker may plead with the investor to not file a complaint because she could lose her license. She may claim that she also lost money on the same investments or may talk about other investors who lost money. She will almost certainly give an explanation that the losses were not her fault. These are deceptive tactics designed to distract you from the broker's bad advice and to dissuade legal action by the investor.

Make no mistake: even with the recent trading scandals and government fines, the brokerage firm's profits are up! These companies are in no imminent danger of going out of business. On the contrary, they are making more money than ever. You as an investor sue the brokerage firm, not the individual broker. The brokerage firm had a responsibility to supervise the broker.

It's also not necessarily true that individual brokers lose their jobs when they lose arbitration cases. Brokers can continue to operate even if they have numerous cases filed against them. We have seen brokers with over a dozen cases and complaints continue to operate with their licenses.

Many investors are embarrassed they lost money. Even if they are victims of bad brokers, they can feel guilty or dumb. Brokerage firms encourage investor guilt by reminding the investor that they bought the stock and should have known better. Remember, you are a victim and are not responsible for the losses.

Investors often rationalize their losses to themselves by thinking that everyone lost money when the market goes down. But not everyone is a victim of fraud and there's a huge difference fraud and broker negligence.

Contact us today if you think you are a victim of broker malfeasance @ 800 440-3554 or email us @ pernicelaw.com for a FREE evaluation of your claim.