Financial Advisor Misconduct

Financial advisor misconduct is not uncommon. Advisors often take advantage of their clients for their own gain. According to Commercial Trial Law, investors report $2 billion in losses due to financial advisor fraud and misconduct in a typical year.

If your financial or investment advisor has engaged in misconduct, negligence, or fraud, you have the right to file a complaint or pursue legal claims to recover money lost.

Victim of Financial Advisor Misconduct?

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How to know if you’ve experienced financial advisor misconduct

Financial advisor misconduct is not always easy to catch. There are many types of advisor fraud and malpractice which are not readily apparent. You may need an expert to look over your investment to bring this misconduct to light.

If you are unsure whether or not you experienced financial advisor misconduct, speak to an experienced attorney. Our financial advisor lawyers are happy to provide you with a free case review and discuss your options.

Examples of Investment Advisor Misconduct

There are many different forms of financial and investment advisor misconduct. Lawsuits have been brought against financial advisors for a variety of misconduct measures, including:

Failure to Execute or Follow Instructions

Advisors who fail to promptly follow an investor’s directions to buy or sell securities may be held liable for any losses incurred by the client due to the advisor’s misconduct.

Unauthorized Transactions

Financial and investment advisors should not purchase or sell securities in a customer’s accounts without first gaining the customer’s authorization. Advisors may be held liable for unauthorized transactions unless the customer gave the advisor discretionary authority to make transactions or discretion regarding price and time.


Falsifying investment documents and account statements, including client signatures, is not allowed, and may be cause for pursing legal claims against your advisor.

Material Misrepresentations and Omissions 

Financial and investment advisors must disclose all important information about a recommended investment, especially information about significant risks. If your advisor omitted pertinent information, speak with a securities attorney immediately.

Sue Your Financial Advisor for Misconduct

Some people are hesitant to sue their financial or investment advisor because they have a good relationship with them, or think they are a nice person. But many advisors have E&O insurance, which will help them cover the costs associated with a lawsuit. Investment advisors are often aware of the risk that comes with their jobs, and are prepared for potential lawsuits.

Suing a financial advisor can result in substantial recoveries. According to “The Market for Financial Advisor Misconduct,” the median settlement paid to clients affected by misconduct was $40,000, with the top percentile exceeding $120,000.

Where and how you can sue your financial advisor for misconduct depends on federal and state laws, the types of investments you hold, and the terms of the contract or customer agreement you signed when you began working with your advisor. Generally, investors can sue their financial advisors through FINRA arbitration or civil lawsuits.

Study: Financial Advisor Misconduct Surprisingly Prevalent

“The Market for Financial Advisor Misconduct” found that financial advisor misconduct is more common than one may expect. According to the study, out of 650,000 registered financial advisors in 2015, one in thirteen advisors had a misconduct record.

The study states

Despite the prevalence and importance of financial advisers, financial advisers are often perceived as dishonest and consistently rank among the least trustworthy professionals.

The study also found that misconduct can happen to almost anyone. If you believe you may be a victim of financial advisor misconduct, it’s important that you act immediately to recover your losses.

Recover Your Losses

If you think your investment advisor took advantage of you or a family member, there are steps you can immediately take to fight back:

  1. Don’t delay
    Every legal claim has a certain amount of time in which you must file a lawsuit (known as a “statute of limitations”). If you don’t act within that time period, you may lose your ability to sue your broker. Sometimes when investors discover that they have been defrauded, they feel embarrassed and ashamed; this can paralyze people and prevent them from seeking help or taking quick action. Reacting rapidly when you discover a possible fraud is incredibly important because the passage of time may affect your rights.
  2. Gather your documents
    Financial statements, stock trades, customer agreements, emails, and other correspondence with your financial advisor could be relevant and useful. However, if don’t have immediate access to all records that are relevant to your case, we are still happy to consult with you.
  3. Consult with an experienced financial fraud lawyer
    Our skilled financial fraud lawyers can conduct an account audit to determine the full extent of your damages and determine whether misconduct occurred. Investment or financial advisors who commit one type of fraud or scam often don’t stop there — understanding the full extent of the harm is critical to determining how best to proceed.

No Cost to File

Some investors are concerned about the prospect of paying an hourly rate or having to pay out-of-pocket in advance for legal representation to sue their financial advisor. We represent our clients on a contingency or “success-fee” basis, which means that if you win the case, the lawyer’s fee comes out of the money awarded to you. If you lose, you will not be required to pay your attorney for the work done on the case.

We are happy to discuss any questions related to our fees as well as different arrangements we can structure.

Scott Silver

Scott focuses his law practice on securities arbitration and litigation and plaintiff-side class action litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others.

Eileen Epstein Carney

Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.

Dave Stein

David’s advocacy has generated major recoveries for consumers impacted by financial fraud. He was named to the Top 40 Under 40 by Daily Journal and a “Rising Star in Class Actions” by Law360.

Amanda Karl

Amanda is spearheading a securities lawsuit against NantHealth concerning fraudulent statements to investors about the success of its key product.

Our Financial Fraud Experience

Gibbs Law Group’s financial fraud and securities lawyers have more than two decades of experience prosecuting fraud. Our attorneys have successfully litigated against some of the largest companies in the United States, and we have recovered more than a billion dollars on our clients’ behalf.

We have fought some of the most complex cases brought under federal and state laws nationwide, and our attorneys have been recognized with numerous awards and honors for their accomplishments, including Top 100 Super Lawyers in Northern California, Top Plaintiff Lawyers in California, The Best Lawyers in America, and rated AV Preeminent (among the highest class of attorneys for professional ethics and legal skills).
titan of plaintiffs bar award
best law firm ranking
chambers USA leading firms award
daily journal top plaintiff lawyers award