Investment losses, securities issues, and financial misconduct.
Financial lawsuits involve disputes over investments, brokerage accounts, securities, financial advice, and other money-related transactions — including alleged misrepresentation, suitability violations, churning, unauthorized trades, Ponzi schemes, and outright fraud.
Common categories of financial claims.
Financial claims typically arise where someone has lost money in an investment, account, or transaction and believes the loss involved misconduct rather than ordinary market risk. Common categories include broker-dealer disputes, investment advisor disputes, claims involving private placements or alternative investments, and securities fraud claims.
Other recurring categories include claims involving Ponzi schemes and investment fraud, complaints about unsuitable investments given a customer's risk tolerance, allegations of churning (excessive trading to generate commissions), unauthorized trading, misrepresentation of an investment's risk or features, and failure to disclose material information.
Securities laws and regulators.
Federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934, set the basic framework for public company disclosures, broker-dealer conduct, and antifraud rules. The Securities and Exchange Commission (SEC) is the primary federal regulator. The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization that oversees brokerage firms and most disputes between brokers and customers.
States also have their own securities laws (sometimes called Blue Sky laws) and securities regulators. Investment advisors may be regulated at the federal or state level depending on the size of the firm.
FINRA arbitration and other forums.
Many disputes between investors and brokerage firms are resolved through FINRA arbitration rather than court, because most brokerage account agreements include arbitration clauses. FINRA arbitration is a private dispute resolution process with its own rules and procedures.
Other financial disputes may proceed in court, including securities class actions, derivative suits, claims against investment advisors, and claims that fall outside the scope of an arbitration agreement. Forum selection often depends on the contract, the type of claim, and the parties involved.