by Brian Mahany
Every week we scan the arbitration decisions published by the Financial Industry Regulatory Authority (FINRA). Never a week goes by without several brokers being held to task for hurting the very customers that hired them for their financial expertise. Many times the brokers worked for little boiler room operations that simply disappear once their scam is exposed. (How many of us have received the urgent cold call from a broker we never met telling us they found a great little stock but we have to “act NOW”?) Often, however, the brokers involved work for seemingly legitimate, well established brokerage firms.
Robert and Michelle Billings of Naples, Florida invested in Fannie Mae back in 2008. Hindsight is of course wonderful and today everyone would agree that was a bad idea. After the housing meltdown of 2007, Fannie Mae was overwhelmed with claims on its mortgage insurance and quickly became insolvent. Within months it was taken over by the government and stockholders in the company – its owners – got nothing.
Normally, we would just chalk this up to a bad investment decision but the Billings said that their broker, Merrill Lynch, recommended they invest in Fannie Mae. Their account representative said the investment was safe even though Merrill Lynch’s own analysts (and most anyone in the financial industry) knew the company was teetering on the brink of insolvency. Even the Billings figured this out; according to a story published by Reuters they asked Merrill Lynch to sell because the price of their shares were tumbling. Once again, their account rep said to hold on. A month later their investment became worthless.
Merrill Lynch denies the allegations but a FINRA arbitration panel ordered the brokerage giant to repay the Billings $1,340,000.00. No punitive damages were awarded.
While the Billings received some measure of justice, tens of thousands of potential claims are never filed each year. Stockbrokers and investment advisers do make mistakes and can be held responsible for their bad advice. While no one has a crystal ball and can guarantee their recommendations, brokers have a responsibility to perform due diligence before recommending a stock or investment. The firm is also required to supervise individual brokers and have an understanding of what they are recommending.
If you lost money because of bad investment advice, do not delay in contacting an attorney. The law imposes a very limited period in which to file a claim.
In most cases the claim must be arbitrated. That usually means a panel of 3 specially trained arbitrators hears the case instead of a judge and jury. The fees associated with arbitration often frighten away customers but frequently the law firm will advance those on your behalf if they feel you have a good case.
If you believe you received bad investment advice, give us a call. The investment fraud and asset recovery lawyers at Mahany & Ertl have recovered millions of dollars for our clients. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Philadelphia, Pennsylvania (affiliate office); Portland, Maine and Minneapolis, Minnesota. Investment fraud cases accepted in many jurisdictions.