Fighting for Investors
Investment Fraud Lawyers Protecting Indiana Investors
The Securities Fraud Lawyers at Greco & Greco, P.C. regularly represent residents from across the country, including Indiana, in disputes with their financial advisors, stockbrokers and securities salespersons. Common claims include suitability, violations of FINRA Rules, negligence, fraud, professional malpractice, misrepresentation, ponzi schemes, breach of fiduciary duty, Reg BI (SEC Regulation best interest), and other claims. Please contact W. Scott Greco for a free attorney consultation about your case. We serve clients from all areas of Indiana, including Indianapolis, Fort Wayne, Carmel, Evansville, South Bend, Fishers, Bloomington, Hammond, Gary, and Lafayette.
Decades of FINRA Arbitration Experience
If an individual investor has a dispute with a FINRA brokerage firm or stock broker, he/she most likely will have to arbitrate through FINRA's Dispute Resolution system. FINRA Arbitration holds arbitration hearings in one Indiana city, Indianapolis.
Contingency Fees for Harmed Indiana Investors
We understand that many of our clients cannot afford to hire an attorney because they have lost a large portion of their life savings. Our attorneys can represent harmed Indiana investors charging only a contingency fee. This means that our clients do not have to pay any attorneys fees up front, and only pay us out of monies recovered in your case.
Indiana Securities Division and Indiana Securities Act
The securities industry in Indiana is regulated by the Securities Division of the Indiana Secretary of State. Its website states that its primary mission is “investor protection.” The Securities Division can pursue civil, injunctive, and criminal actions resulting from violations of the Indiana Securities Act. Harmed investors can file a complaint with the Securities Division on its website here.
The Indiana Securities Act, linked from the Securities Division website, provides for civil liability to investors for violations of the act by broker-dealers, their agents, brokers, and investment advisors. Violations include engaging in fraudulent acts or practices related to the sale of a security, and false statements or omissions of material fact related to the sale of securities and related investments. IC 23-19-5-9 provides for an award of rescission or damages, plus 8% interest and reasonable attorneys fees for violations of the fraud provisions of the Act.
Common Legal Claims by investors against their financial advisors in Indiana
Suitability/Regulation Best Interest. Prior to recommending the purchase of specific investments or a specific investment strategy to a customer, a stock broker is required to determine that the investments are suitable to that particular investor. A suitability determination is based upon many different factors such as age, investment objectives, risk tolerance, employment situation, needs, income, assets, and investment experience. If an advisor’s recommendations of unsuitable investments result in the investor incurring significant losses, that investor may have a suitability claim against the broker and his/her firm. Suitability claims have been superseded in 2020 by SEC Regulation Best Interest which requires that recommendations of securities and securities strategies be in the best interest of the customer.
Churning. Churning occurs when a broker exercises control over an account and allows the broker's interest in making commissions to override the investor's interests in the account. When a broker makes a buy or sell recommendation for an account, that broker should have the investor's best interests based on their investment objectives in mind. If the broker makes excessive buy and sell recommendations for the purposes of generating commissions for the broker by each buy and sell, that broker is engaged in churning the account. Excessive turnover in the assets of the account and/or a high cost to equity percentage are often a sign of churning.
Unauthorized Trading. Generally, an investor can have two kinds of an account, non-discretionary and discretionary. In a typical non-discretionary account, the broker must consult with and obtain the consent of the customer prior to making a trade in the account. Unauthorized trading occurs when a broker makes trades in a non-discretionary account without the consent of the customer.
Securities Fraud. Most of the claims in this list are subsets of securities fraud which is employing a device, scheme, or artifice to defraud, or obtaining money by means of untrue statements of material facts and failure to state material facts in violation of the Indiana Securities Act or federal law (Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5). If a broker makes false statements to an investor or fails to advise the investor of certain important facts, the investor may be able to recover losses incurred resulting from this fraud.
Margin Disputes. Margin trading involves borrowing money from the brokerage firm to purchase securities greater in value than the equity in an investor's account. Due to the risky nature of trading on the margin, disputes with brokers often arise as a result of significant losses. If a broker trades on the margin without the knowledge or consent of the investor, the investor may be able to recover the losses resulting from the fraud. Recommendation of a margin strategy falls under Regulation Best Interest.
Ponzi Scheme Investment Scams. Ponzi schemes generally involve promises of high returns by salespersons over short periods of time, but in reality result in stealing from Peter to pay Paul. Because returns to investors in ponzi schemes are often paid out of new investment monies from new investors, the scheme will ultimately fall apart when the new investors dry up, leaving all investors often holding a worthless investment. Financial Advisors and their brokerage firms who sell ponzi scheme fraudulent investments may be found liable for selling unsuitable investments, securities fraud, sale of unregistered securities, failure to supervise, and other legal violations.
Failure to Supervise Advisor. FINRA firms have a duty to supervise their registered brokers, and their failure to do so may form the basis of various legal claims against them. FINRA Rule 3110 states: Each member shall establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA Rules. Final responsibility for proper supervision shall rest with the member. Registered Investment Advisory firms also have a duty to supervise.
Examples of legal grounds for liability of Broker-Dealers in these situations in Indiana include:
- Under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;
- A broker's Broker-Dealer can also be found liable as a control person of that broker under state and federal securities laws, including the Indiana Securities Act; and
- Claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, just and equitable principles of trade, and outside business activities.
This list is by no means comprehensive and all of the legal requirements of the above claims stated are not completely set out. This web site is not intended to give legal advice or create an attorney-client relationship. Please contact our securities lawyers for a free attorney consultation if you are an Indiana resident and believe your financial advisor broker may be liable under one of the above claims, or for other wrongful conduct.