Stockbrokers and financial advisors have a duty to recommend investments that are appropriate based on your specific circumstances. Unfortunately, this doesn’t always happen.
Our firm was hired by an elderly couple in 2015 who had suffered substantial losses in their investment account, managed by their long-time and trusted financial advisor. At first, they didn’t really understand what had happened, and they asked their daughter for help looking things over. She immediately contacted our firm.
These clients had been using this particular financial advisor with no issues for many years. They were in their 90s at this point, retired, unsophisticated investors. They lived modest lives in rural Texas, paying their bills from social security checks and a modest teacher’s pension.
After our attorneys had a chance to dig into the monthly statements from their brokerage firm, it became obvious that the account was heavily concentrated in oil and gas securities starting in 2014. Of course, the oil and gas industry is extremely volatile. Their account was certain to collapse in the event of an energy downturn, which is exactly what happened in 2015. They lost nearly everything.
The worst part was that the clients had marked “preservation of principal” as their investment objective, signifying that they were conservative investors. What they received from the broker was far from conservative.
We took the case and filed it with the Financial Industry Regulatory Authority (FINRA) dispute resolution forum. A year later, after time for discovery and document exchange, we argued before an arbitrator in Dallas, TX that not only were the investments unsuitable, but the risks associated with the individual investments and the overconcentration was not disclosed to the clients.
Following three days of evidentiary hearing sessions, the arbitrator granted our clients full compensatory damages, costs, attorney’s fees, and interest, totaling about $117,000.
Often times, older investors understandably rely on their financial advisors to do the right thing and protect their interests, as they often suffer a cognitive decline that is just indicative of a ripe old age. What we see time and time again is that senior investors are vulnerable to this type of misconduct, and if often goes unnoticed or unreported.
If you have older family members who rely on financial advisors, it’s in their best interest to have a knowledgeable third-party in the line of communication regarding the account, simply to reduce the chance that these types of things don’t happen. If they already have happened, we may be able to help, as we did for this couple in Texas. But please, understand that prior results are not a guarantee of future results in other cases.
Call us to discuss your case with a member of our firm, or fill out the form on our website to schedule a free case evaluation today.