Do you believe your financial advisor stole money from you? In this article we’ll look at the common forms of financial advisor theft, and the steps you should take from here.
Financial advisor theft comes in a wide range of different forms.
In some cases, the fraud is incredibly complex, involving churning schemes, funds being routed through multiple different accounts, or perhaps even fake documents.
In other cases, financial advisor theft is flagrant, involving the forging of a customer’s signature or the outright conversion (theft) of funds.
If you have been the victim of financial advisor theft, it is normal to feel stressed out and overwhelmed by your situation. Becoming a victim is not only frustrating and emotionally distressing, but it can be financially devastating.
In many cases, investors do not know where to turn or what to do to get their money back.
What to do if you suspect your financial advisor of stealing money
At Sonn Law Group, our investment fraud lawyers hold bad acting financial advisors accountable. We want to make sure that all investors have the tools that they need to recover stolen or misappropriated funds.
If your financial advisor has stolen money from you or from one of your family members, please contact our law firm today. We will carefully review your case if your financial advisor is stealing money from you. We will clearly explain all of your available legal options to you, and help you take legal action to get justice and compensation.
Preserve Documents, Gather Relevant Evidence
If you were the victim of financial advisor theft, it is imperative that you preserve all of the records and documents that you have that are related to your relationship with your financial advisor and their member firm.
Among other things, you should be sure to save:
- All of the account statements you can find;
- Any customer agreement or other documents that you have signed;
- The marketing materials that you have received from the financial advisor or their member firm;
- All correspondences with your financial advisor, including any written letters, e-mails, text messages, or recordings; and
- Any contemporaneous notes that you took during conversations or meetings with your financial advisor.
Ultimately, the more information you have in your possession, the better off you will be during the claims process.
An experienced investor rights attorney will be able to review these documents. With this information in hand, your attorney can determine what specific legal options are available to you and what you need to do to file a lawsuit or a legal claim to get your money back.
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Review Your Customer Agreement With Your Financial Advisor
When you first started working with your financial advisor, you likely signed a customer agreement. You need to review the terms of this agreement. If you no longer have access to the agreement, you should request a copy from your financial advisor’s member firm.
Notably, the overwhelming majority of modern financial advisor agreements contain mandatory arbitration provisions. In most cases of financial advisor misconduct, investors must seek compensation through the FINRA arbitration process, instead of through securities litigation. Though, there are certainly some exceptions to this general rule.
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Your Financial Advisor’s Firm May Be Legally Liable for Your Losses
Under federal securities law and securities industry regulations, registered investment firms have a legal duty to supervise their financial advisors. Section 15(b)(4)(E) of the Securities and Exchange Act of 1934 makes a securities firm liable for the conduct of representatives.
In addition, several Financial Industry Regulatory Authority (FINRA) regulations require firms to proactively detect and prevent financial advisor fraud and abuse.
If your firm’s failure to supervise your financial advisor has resulted in you sustaining investment losses, then that firm may be held legally responsible for your damages.
To be clear, the duty to supervise securities representatives is a strong legal requirement. Registered investment firms must take many different steps to ensure that they are protecting their customers from irresponsible and criminal financial advisors. This includes:
- Careful screening and comprehensive background checks during the hiring process;
- Regular monitoring of correspondence between financial advisors and investors;
- Consistent review of a customer account records and customer transactions; and
- Immediate and thorough investigation of any and all indications of misconduct.
Certainly, the financial advisor that steals money from a customer should be held legally liable. However, their member firm shares just as much responsibility for the fraud. In many cases, financial advisor theft could have been prevented, if only the investment firm had properly supervised the representative.
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Get Guidance From an Investor Rights Attorney
You should not go through the investment fraud claims process on your own.
As soon as you suspect a problem, you should reach out to an experienced financial fraud attorney. You have limited time to take action to get your money back. Your attorney will be able to tell you exactly what you should do next. Financial theft cases are unique: It is important to work with an attorney who can review the specific facts of your case.
As a general rule, your attorney may start by helping you raise the issue with the compliance department at your financial advisor’s company. There are many cases in which raising the issue can help to facilitate a relatively quick settlement.
That being said, there are also many cases in which investors must escalate the issue to get the full compensation that they are owed. Your attorney can determine if informal negotiation, FINRA mediation, FINRA arbitration, or securities litigation is the best path to get you a full financial recovery.
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Review Recent FINRA Disciplinary Actions Related to Theft and Misappropriation
- SEC Accuses German Nino – Weston Florida Financial Advisor – of $5.8 million Theft (1/27/2022)
- NJ Financial Advisor Kenneth Welsh Accused of Fleecing Clients of $2.86M (10/29/2021)
- Jeffrey Dampf, Formerly of PFS Investments, Barred by FINRA Following Refusal to Provide Testimony (10/12/2021)
- Raymond Ferro – Ex-Woodbury Financial Broker – Faces Allegations of Theft (8/6/2020)
- Dain Stokes, Formerly of LPL Financial, is Facing Allegations of Converting Client Funds through a Fake African Charity (12/27/2019)
- Frederick Stow, Formerly of Raymond James & Associates, Discharged Following Allegations of Client Fund Misappropriation (10/23/2019)
- Cetera Advisors, LLC Charged with Breach of Fiduciary Duty and Defrauding Clients (10/16/2019)
- SEC Charges Cambridge Capital Group Advisors, LLC and Two Former Executives with Defrauding Former-NFL Player Investors (9/24/2019)
- Michael Barry Carter, Former Morgan Stanley Broker, Barred from FINRA for Misappropriation (9/13/2019)
- Elias “Herbert” Hafen, Former Morgan Stanley Broker, Barred for Defrauding Clients (9/9/2019)
- Scott Andersen, Broker with Wedbush Securities, Involved in Lawsuit Alleging Conversion and Fraud (8/28/2019)
- Marcus Boggs Formerly of Merrill Lynch Charged With Fraud for Stealing More Than $1.7 Million From Clients (8/27/2019)
- Dennis Gibb, Former Founder and Owner of Sweetwater Investments, Sentenced to 5 Years in Prison for Stealing Over $3 Million of Client’s Investments (7/11/2019)
- Michael Seigel, former National Securities Corporation Broker, Faces 3 Years in Prison for Defrauding Elderly Couple (7/8/2019)
- Michael Alan Siegel, Former National Securities Broker, Barred From FINRA For Theft (7/8/2019)
- Kimberly Kitts Formerly of Royal Alliance Associates Barred By the SEC for Misappropriating Client Funds (6/20/2019)
- Broker Alert: Michael Royce Minghenelli Disciplined over Conversion of Funds (2/26/2019)
- Broker Christopher Lee Hibbard Fired by Merril Lynch After Theft Allegations (3/6/2018)
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Find Out How the Sonn Law Group Can Help
At Sonn Law Group, we are aggressive advocates for investors. If your financial advisor stole money from you, our legal team is here to protect you. We understand how much devastation financial fraud can cause for victims and their families. For a free, fully private consultation, please contact our law office today. We handle cases on a contingency basis — you only pay our legal fees if we win your case.