by Brian Mahany
3 former stockbrokers at J.P. Morgan probably thought they were living the high life. According to a complaint filed with the Securities Exchange Commission, the trio generated $845,000 in commissions while their customers lost $2.7 million. A complaint doesn’t mean any of the individuals have been convicted yet of doing anything wrong. Their employer, J.P. Morgan, has elected to pay up while not admitting any wrongdoing.
In our experience, innocent parties don’t cough up hundreds of thousands of dollars if they are innocent.
The three brokers were accused of disregarding instructions from their clients and with churning accounts. Churning occurs when a broker makes repeated trades simply for the commissions that each sale generates. The government says there were so many transaction in the affected accounts that some victims would have had to make a 73% return on investment just to break even. Interest rates are hovering around 1% or less.
Brokers also have a legal obligation to understand their customers’ needs, recommend only investments suitable for that client and to follow their clients’ instructions.
If you lost money to a stock broker or investment adviser, you may be entitled to recoup your losses if you can prove that brokers ignored your instructions, recommended unsuitable investments or churned your account. If you think that happened to you, give us a call. In most instances your case can be heard by an arbitration panel and a decision rendered in a bout a year or less.