California Investment Fraud Attorneys
Investors trust financial advisors and broker-dealers to act in their interest. When that trust is violated through fraud, unsuitable recommendations, excessive trading, or outright theft, the losses can be devastating: retirement savings wiped out, college funds depleted, decades of wealth destroyed in months.
The attorneys at Rosenberger + Kawabata represent individual investors, retirees, and families in securities arbitration and litigation against broker-dealers, investment advisors, and the firms that employ them. We pursue claims through FINRA arbitration, AAA arbitration, and state and federal court. Our office has recovered millions of dollars on behalf of clients.
Securities Fraud and Broker Misconduct
Our securities arbitration practice covers claims arising from broker-dealer and investment advisor misconduct, including:
- Suitability and Breach of Fiduciary Duty. Broker-dealers and investment advisors are required to recommend investments that are appropriate for each client’s financial situation, risk tolerance, and investment objectives. When they recommend unsuitable investments to generate commissions or fees, they can be held liable for the resulting losses.
- Overconcentration and Failure to Diversify. Brokers who concentrate a client’s portfolio in a single sector, asset class, or product type expose that client to unnecessary risk. We pursue claims where lack of diversification caused avoidable losses.
- Churning and Excessive Trading. Churning occurs when a broker executes trades primarily to generate commissions rather than to benefit the investor. We analyze trading records to identify excessive activity, turnover rates, and cost-to-equity ratios that evidence churning.
- Unauthorized Trading. Trades executed without the investor’s knowledge or consent violate FINRA rules and can form the basis of an arbitration claim for resulting losses.
- Failure to Supervise. Brokerage firms have a duty to supervise their registered representatives. When a firm fails to detect or prevent broker misconduct, the firm itself can be held liable for the investor’s losses.
- Selling Away. Brokers who sell securities not approved or offered by their firm are “selling away,” which violates FINRA rules and often exposes investors to unregistered, high-risk investments.
- Broker Theft and Misappropriation. When a broker or advisor converts client funds for personal use, whether through unauthorized transfers, forged documents, or Ponzi-like schemes, we pursue recovery of the stolen assets.
Investment Product Fraud
Certain investment products generate outsized commissions for brokers, creating conflicts of interest that lead to investor harm. We handle claims involving:
- Non-Traded REITs. Non-traded real estate investment trusts are illiquid, carry high fees, and are frequently sold to investors for whom they are unsuitable. Brokers earn substantial commissions on these products, which creates an incentive to recommend them regardless of suitability.
- Private Placements. Private placement offerings are exempt from SEC registration and carry significant risk. Brokers who sell private placements without adequate due diligence or to investors who do not meet suitability requirements can be held liable.
- Variable Annuities and Structured Products. Complex products with high internal costs and surrender penalties are frequently recommended to investors who do not understand the risks or who have no need for the product’s features.
- Junk Bonds. High-yield corporate bonds issued by companies with poor credit ratings carry serious default risk. When brokers overconcentrate client portfolios in junk bonds without adequate disclosure, investors suffer avoidable losses.
FINRA Arbitration and Securities Litigation
Most securities fraud and broker misconduct claims are resolved through FINRA arbitration rather than court litigation. FINRA arbitration is faster than traditional litigation. Cases are decided by panels of one or three arbitrators.
We handle every stage of the arbitration process: pre-filing investigation, statement of claim drafting, discovery and document requests, briefing, and hearings. Where claims are not subject to FINRA jurisdiction, we litigate in state and federal court.
The attorneys who will present your case at hearing are the same attorneys who investigate the facts, analyze the trading records, and build the claim from day one.
Elder Financial Abuse and Investor Exploitation
Older investors and retirees are disproportionately targeted by unscrupulous brokers and advisors. Seniors who have accumulated significant savings, inherited wealth, or rolled over retirement accounts are often steered into high-commission, high-risk products they do not need and cannot afford to lose. California law provides additional protections and remedies for elder financial abuse, and we pursue those claims aggressively.
Signs of Broker Misconduct
Common indicators that your broker or financial advisor may be engaged in misconduct include:
- Unexplained or excessive losses, especially when the broader market is performing well.
- Trades on your account statements that you did not authorize.
- Difficulty reaching your broker or getting straight answers about your account.
- Recommendations that do not match your stated risk tolerance or financial goals.
- Missing account statements or errors on statements you do receive.
- Pressure to invest additional money quickly.
If any of these apply to you, contact us for a confidential review of your account.
FAQs
How does FINRA arbitration work?
FINRA arbitration is the primary forum for resolving disputes between investors and broker-dealers. Claims are filed with FINRA Dispute Resolution Services, and the case is heard by a panel of one or three arbitrators depending on the amount in controversy. The process typically takes 12 to 18 months from filing to hearing. Discovery is more limited than in court, but arbitrators have broad authority to award compensatory damages, interest, and attorneys’ fees.
How much does a securities arbitration lawyer charge?
Fee arrangements vary. Some securities arbitration attorneys work on a contingency basis, meaning they collect a percentage of what they recover and charge nothing if there is no recovery. Others bill hourly or use a hybrid arrangement. We discuss fees transparently in the initial consultation.
What is the statute of limitations for investment fraud in California?
It depends on the specific claim. Under California law, statutes of limitations for securities fraud claims range from one to five years depending on the cause of action. FINRA’s eligibility rule separately requires that claims be filed within six years of the events giving rise to the dispute. Because these deadlines can bar your claim entirely, it is important to consult an attorney promptly after discovering potential misconduct.
What is the difference between securities fraud and broker negligence?
Securities fraud involves intentional misrepresentation or omission of material facts. Broker negligence involves a failure to exercise reasonable care: recommending unsuitable investments, failing to diversify, or failing to supervise. Both can result in liability and both are actionable in FINRA arbitration. Many claims involve both theories.
Talk to a California Investment Fraud Lawyer
If you believe your broker or financial advisor caused you investment losses through misconduct, fraud, or negligence, contact us. We will review your account, assess your potential claims, and explain your options. Call (310) 894-6921 or submit an inquiry through our contact form.