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Are My Losses the Result of the Market, or Something Else?

By Robert Linkin | August 30, 2015

Complex Litigation, Securities Litigation

When a market correction occurs (such as what appears to be occurring over the last several days), the question that many investors find themselves asking is “Are my losses just ordinary losses? Or is something else at play here?” Certainly, the vast majority of losses suffered by investors during a market downturn are just that — the result of a market correction. But, from time to time investors may have concerns that the losses they have suffered stem from something else entirely– broker-dealer misconduct. We list below some of the common forms of broker-dealer misconduct which may give rise to legal action by an investor against their broker-dealer.

  1. Unsuitable Investments: Broker-Dealers have a duty to ensure that each security they recommend and sell to you is suitable in light of your investment goals and investor profile. For example, a high-risk/high-reward investment may be inappropriate for you if you are a conservative investor, or if due to your age or an upcoming need, you have a short time horizon. Just as importantly your broker-dealer has a responsibility to ensure that the investments they offer are suitable for anyone. In other words, did your broker-dealer conduct adequate due-diligence into the securities they offer for sale?
  2. Over-concentration: Broker-Dealers have a duty to ensure that your account is properly allocated among types of investments (eg. equities, income producing investments, etc.), investment classes (eg. growth stocks, value stocks, etc.) and sectors (eg. energy, technology, financial services, etc.) when recommending investments to you and providing you with financial advice. Is your account properly allocated or do you notice that an unusually high percentage of your investments are in a single class of investment?
  3. Churning: Broker-Dealers cannot simply recommend investments to you for the purpose of generating commissions. Is there a purpose to the investments sold to you? Does it seem as if the level of activity in your brokerage account only occurred for the purpose of creating fees?
  4. Fraud/Misrepresentation: Did your Broker-Dealer make false statements to you when recommending the sale of a security which has now suffered significant losses? Is money missing from your account? These and other activities are signs of fraud and misrepresentation and may give rise to a claim against your broker-dealer.

While this market disruption continues, it is again important to note that the majority of losses are simply the result of market losses and not the result of broker-dealer misconduct. However, if you suspect that broker-dealer misconduct may have a role to play in your losses or are simply unsure, seek the assistance of a trusted professional who can help you answer your questions. The most important thing you can do during these times is seek out information and keep yourself fully informed regarding your financial accounts.

Rob Linkin is a partner at Duggins Wren Mann & Romero, LLP, a full-service law firm located in Austin, Texas. Rob represents investors and victims of investment fraud and broker-dealer misconduct. If you believe you have suffered losses as a result of broker misconduct, please contact Rob Linkin for a free consultation at (512) 744-9300 or via e-mail at


Duggins Wren Mann & Romero, LLP, is located in Austin, Texas. If you would like to learn more about our Firm, our professionals, or our ability to serve you, please contact us.

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