What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: March 21, 2022

Chicago-based Stoltmann Law Offices represents elderly investors who’ve been defrauded by financial advisors, insurance agents, and investment advisers. Did you know that brokerage firms are required to maintain a list of “trusted contacts” for their older clients? That ensures that investors have a safeguard against broker abuses. A relatively new rule from FINRA, the federal regulator for the U.S. securities industry “requires firms, for each of their non-institutional customer accounts, to make a reasonable effort to obtain the name and contact information for a trusted contact person (TCP) age 18 or older.”

Why does such a rule exist? To protect senior investors, who are frequently the target of scam investments, excessive trading, and sales of products that take on unnecessary risk.

“A trusted contact,” according to FINRA, “is a person you authorize your financial firm to contact in limited circumstances, such as if there is a concern about activity in your account and they have been unable to get in touch with you. A trusted contact may be a family member, attorney, accountant or another third-party who you believe would respect your privacy and know how to handle the responsibility. You may establish more than one trusted contact.”

While a trusted contact provides a needed guardrail for most clients, they can’t make investment decisions for you. “Designation as a trusted contact does not provide the designated person with authority to make transactions in your account and does not make that person a power of attorney, legal guardian, trustee or executor. By designating a trusted contact, you are authorizing the firm to contact someone you trust and disclose information about your account only in limited circumstances.”

Note: Brokers have a legal duty to carefully vet all trades and investments to ensure that the securities they are selling meet your financial goals and risk tolerance. If you choose to take on more risk, they must explain in clear detail the downside of such an investment. They also need to ensure that the investments they are selling are legitimate.

Have you invested with brokers who have sold you money-losing or overpriced investments or traded without your permission? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk or vet shady companies offering investments, you may have a case in arbitration.

Firms are also legally required by FINRA to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Broker-dealers and advisors are also required to fully vet all of the investments they are selling to determine if they are suitable for your age and risk tolerance. Investors can file FINRA arbitration complaints if these rules are broken. You can often avoid rogue broker-advisors by checking their backgrounds through BrokerCheck,

If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!

Disclaimer

The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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Chicago Investment Fraud Attorneys Offering Nationwide Representation to Investors

If you have suffered financial losses because of the negligence or fraud of your financial advisor or broker through unsuitable investment recommendations, over-concentration, churning, misrepresenting risks, conversion or selling away, you have legal rights and options to pursue recovery of those losses.

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