The management of your investment portfolio is one of the primary responsibilities of your stockbroker or financial planner. This includes the allocation of your assets, choosing a management strategy, managing your risks by keeping your portfolio diverse, and otherwise ensuring that they are taking the steps necessary to attain your investment goals.
As you can imagine, the mismanagement of your portfolio and accounts can have dire consequences, up to and including the loss of a substantial sum of money—caused not by the risk of investing but by your stockbroker’s negligence. Continue reading to learn more about different ways your investment portfolio can be mismanaged and what you can do to recover your stock losses.
Examples of Portfolio Mismanagement
As an investor, you should feel comfortable trusting your stockbroker. Unfortunately, stockbroker misconduct, including portfolio mismanagement, is more common than you might think. There are several different ways a broker can mismanage an investment portfolio, many of which are fraudulent. Some of the most frequently seen types of portfolio mismanagement include:
- Not keeping a portfolio diverse
- Concentrating assets
- Making unsuitable recommendations
- Selling away
- Unauthorized trades
- Churning/excessive trading
- Failure to supervise
In many cases, stockbrokers are able to continue to defraud their investors because the investor simply doesn’t notice the transactions in their accounts or because they have absolute trust in their broker.
By the time an investor catches on to the scheme, they usually have suffered a massive stock loss as a result of the portfolio mismanagement as a whole. If you believe your investment loss was caused by a negligent broker, you have the right to hold them accountable and seek compensation for your damages.
What You Can Do About It
FINRA arbitration is oftentimes the best route to take when you are seeking reimbursement for your stock market losses. Generally speaking, once you’ve made the decision to initiate FINRA arbitration, your stockbroker and possibly their brokerage firm will likely attempt to work with you to settle your case before it is heard by a panel of arbitrators.
Once the arbitrators have heard the case, their decision will be final, and neither party will be able to appeal their decision to issue or deny a restitution award. But in other cases, either the negligent party doesn’t believe they are liable, or they think they have a chance of winning in arbitration.
In any event, your FINRA arbitration attorney will work to gather all of the supporting evidence needed to establish stockbroker portfolio mismanagement in your case so you can be awarded the maximum repayment that is rightfully yours.
Work with a Portfolio Mismanagement Lawyer
Figuring out whether your financial loss stems from stockbroker misconduct or fluctuating markets can be challenging. If you suspect that your broker did not responsibly manage your investment portfolio and you have endured losses in excess of $100,000, reach out to an experienced portfolio mismanagement lawyer at Meissner Associates as soon as possible.
You can contact our office by phone at 212-764-3100 or fill out the brief contact form to the right of this article.