Published On: February 1, 2017

Recently a client called us and asked if his investment firm that sold him Platinum Partners related investments might be liable for the losses sustained.  The simple answer is possibly, yes.  Many registered investment advisors (RIAs) heavily sold Platinum Partners to clients.  The resulting losses have been devastating.  Fortunately for these victims, RIA’s have very specific, detailed duties to clients, including a fiduciary duty.  In 1963, the U.S. Supreme Court ruled that Section 206 of the Investment Advisers Act imposes a fiduciary duty on RIAs. Securities Exchange Commission v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (1963), was the Supreme Court’s first interpretation of the Investment Advisers Act. To this day, the case is cited frequently by lower courts and the SEC in enforcement actions.

A fiduciary obligation is one that goes beyond the suitability standard typically owed by registered representatives of broker-dealer firms to their clients. The relationship between an RIA and the firm’s clients is built on the premise that the investment advisor will always do the right thing for the person or entity receiving advice. It is a special relationship that does not exist between most businesses providing services to their customers. In June of 2009, a group of investment industry leaders formed The Committee for the Fiduciary Standard and called on Congress to adopt an authentic fiduciary standard. This committee put forth a list of five core principles of the fiduciary standard to help individual investors make the distinction between an investment advisor’s fiduciary standard and a broker’s suitability standard (Figure 8-1).  These include:

Put the client’s best interest first

Perform reasonable due diligence on investments before recommending them to clients.

Act with prudence, that is, with the skill, care, diligence and good judgement of a professional

Do not mislead clients—provide conspicuous, full and fair disclosure of all important facts

Avoid conflicts of interest

We believe the underlying fraud at Platinum Partners should have been identified by the registered investment advisors buying the products associated with them.  The failure to do so can make the RIA’s liable.  If you were recommended any investments associated with Platinum Partners, fro the firms below, please call our law firm at 312.332.4200 to learn how these investments can be recovered on a contingency fee basis.

Palladium Capital Advisors, LLC and Monarch Bay Securities LLC; Financial Fairplay AG; Cantone Research, Inc; Thomas Group Capital; Cluran Group; Fin West; Alphasource Capital Securities LLC; Paratum, Inc.; Eaton Partners, LLC; Abraham Biderman/Eagle Advisors; Spencer Clarke LLC; Seton Securities Group; C-Advisors; Bhargava Capital; KPG Capital Partners LLC; Gar Wood Securities, LLC; Alpha Capital Securities LLC, Shepherd Kaplan

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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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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