If you’re reviewing your investment accounts and only now realizing the extent of your real estate or private placement investment losses from the past year, it may not be too late to take action. These types of investments often carry more risk and less oversight than traditional investments, making them especially vulnerable to broker misconduct.
Losses that result from broker misconduct may be recoverable through certain legal paths. Here’s how to recognize the signs of misconduct and what steps to take if you suspect it played a role.
1. Look for Signs of Broker Misconduct
With all investments, there is a natural element of risk involved. However, certain signs may indicate that your losses are not legitimate outcomes of a healthy market but instead the result of a dishonest or negligent broker. In these cases, there may be legal options available to pursue recovery with the help of an investment fraud lawyer. Some common warning signs of misconduct include:
- Promises of guaranteed returns. Any broker who convinces you that an investment is without risk is not being fully honest with you. Be wary of offers that seem too good to be true or pressure to send advance fees. Always conduct your own research before investing, even when you trust the source of information.
- Unsuitable investments. Brokers are bound by professional standards to assess their clients’ risk tolerance, investment goals, age, and experience as part of how they make their recommendations. In cases where they do not, they may be held accountable for making unsuitable investment recommendations.
- Failure to perform due diligence. A broker must perform at least the minimum standard of due diligence on what they recommend to their clients, not only for suitability but also for legitimacy. Scams that slip through the cracks of broker due diligence may be actionable by law when they lead to investment losses.
- Difficulty getting in contact. If a significant period of time has passed with no response from your broker and you are concerned about losses from your account, contact not only their supervisor, but also an investment loss attorney to assess your options.
- High fees and frequent trades. This may be a sign of churning, or excessive trades meant to generate commissions for your broker, at the expense of your account balance.
- Consistent losses, even during market upswings. One of the biggest red flags is consistently losing money from your accounts, even when there is no obvious reason why.
2. Understand Your Legal Options
If you suspect that broker misconduct played a role in your 2024 losses, you may be able to take legal action to recover those losses. There are multiple options, including filing a lawsuit in court (litigation) or pursuing a claim through FINRA arbitration, which is a dispute resolution process for investment-related issues.
Litigation may allow for higher damages, but it is not an option in every case. Meanwhile, FINRA arbitration can be swifter and more efficient than courtroom action, but it also brings with it no possibility for an appeal. For this reason, it is important to file correctly the first time and with as much evidence as possible when bringing a FINRA case. For both of these paths, filing promptly is critical. There is a statute of limitations for recovery due to financial loss.
3. Gather Documentation
Keep as many records as possible as soon as you suspect broker misconduct or fraud. Write down not only your losses, but also any conversations you have had with your broker about your accounts. Consider printing out copies of your communication with your broker as well as any interactions you have had with their supervisor. You should bring your account statements, any contracts you have signed, emails, text messages, and any other documentation regarding the investment to your first meeting with an investment loss attorney.
4. Talk to an Investment Loss Attorney
It’s important to consult with an experienced investment loss attorney as early as possible if you suspect broker misconduct. Many brokers attempt to take advantage of their clients by obfuscating the truth about a bad investment or burying the issues with a security, policy, or stock option beneath a heap of financial jargon. This means you often need the help of an expert to parse through their false promises and understand exactly how you got into trouble, as well as what can be done about it.
Most law firms offer free consultations and contingency-based fees. You do not have to pay a large amount of money up front to find out if you may be able to recover funds. Once you do receive a settlement, you can typically pay for the attorney’s services from the money that they have won back for you.
It’s Not Too Late to Take the First Step
If you have lost money in a real estate or private placement investment in 2024 due to broker misconduct or fraud, it is worth exploring your options, even now. Find out if you can recover a percentage of your loss, as well as possible damages, either with a FINRA arbitration claim or an investment loss lawsuit. An investor protection attorney can help you pursue your case either way to ensure that you do not miss an opportunity for recovery. While reporting to a supervisor or a state fraud agency can help shine a light on bad actors, only an investment loss attorney will be personally dedicated to protecting your own financial recovery if you suffered from avoidable losses.