Arkansas Securities Arbitration Attorneys

For over 25 years, the securities arbitration attorneys at Malecki Law have provided legal representation to investors and retirees across the country who have been victimized by securities and financial fraud. The firm’s founder, Jenice L. Malecki, Esq., has recovered tens of millions of dollars for senior investors and retirees, and is a passionate advocate for serving the underrepresented, in particular elderly victims of financial abuse. This is an area that has held continued national focus by securities regulators like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).  FINRA Arbitration is the forum where most retail securities disputes are required to take place, and it has advantages over bringing actions in court, as will be discussed further below. The focus on senior exploitation is not exclusive to national regulators, but also state regulators like the Arkansas Securities Department.

Last month, the Arkansas Securities Department announced Elder Abuse Awareness Month, reminding all Arkansans to be vigilant for financial exploitation, but especially seniors, a notoriously vulnerable group. The announcement reviewed a list of financial abuse red flags for seniors in connection with accounts at large financial firms, which consists of general warning signs applicable to almost anyone with a retirement account, including the following:

• Sudden changes in accounts or banking practices, including unexplained withdrawals of large sums of money
• The inclusion of additional names on an older adult’s account or banking cards
• Unauthorized withdrawals of the older adult’s funds using an ATM card
• Abrupt changes in will or other financial documents
• Discovery of a forged signature for financial transactions or for the titles of the older adult’s possessions
• Sudden appearance of previously uninvolved relatives claiming their rights to an older adult’s property or possessions
• Unexplained sudden transfer of assets to a family member or someone outside the family
• The provision of services that are not necessary
• An older adult’s report of financial exploitation

A lot of the above can happen unnoticed in an account, which is why financial firms have duties to supervise the accounts and the individuals that service them. Financial firms additionally have “know your customer” (KYC) obligations, which means that changes in accounts belonging to seniors need to be monitored and investigated with special care.

FINRA’s supervision rule is codified under Rule 3110 of its customer arbitration code, stating:

“Each member shall establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules. Final responsibility for proper supervision shall rest with the member.”

Among other things, the subparagraphs of Rule 3110 require the establishment and maintenance of written supervisory procedures, the designation of licensed principals with authority to carry out and enforce the supervisory responsibilities, and the assignment of a supervisor to monitor the activities of each financial professional and the customer accounts they manage. 

Similarly, FINRA Rule 2090 is the “Know Your Customer” rule, which expects supervisory oversight to be tailored to what a firm must know about its customers. FINRA’s KYC rule is drafted much more broadly than its Rule 3110 supervisory rule, and states in its entirety as a single sentence as follows:

“Every member shall use reasonable diligence, in regard to the opening and maintenance of every account to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.”

As the above applies to all accounts, including senior accounts and those accounts where a senior is a named beneficiary, it is clear that a firm is charged with an affirmative duty to understand transactions within and changes to an account in the context of who the account belongs to. In the case of a senior, large withdrawals and changes to account should invite more supervisory scrutiny than for other investors generally – i.e., that’s just part of knowing who the customer is, who has authority on the account, who can write checks, who can make withdrawals, and so forth. This is how the securities rules, such as supervision and KYC in this example, are expected to work together. Thus, of importance for any investor seeking a recovery against large financial firms with these supervision and KYC obligations, is to hire a securities arbitration law firm that is fully familiar with industry supervision laws and KYC requirements, not to mention a law firm knowledgeable in securities and adept at navigating the FINRA forum, as well as state and federal courts when necessary. The securities arbitration lawyers at Malecki Law have successfully litigated in all of these forums.

Losing one’s retirement savings is devastating, especially to seniors and retirees who are no longer in the workforce and cannot earn the money back. In the current day and age of stock trading on one’s mobile phone, it is seniors who tend to rely more on the advice of a financial advisor, thus making them more vulnerable to abuse. It can be hard to spot a dishonest financial advisor, as financial advisory relationships are built on trust over many years. One easy tool that most investors should take advantage of to protect their savings is to perform an online search regarding the adviser’s background. FINRA’s Brokercheck website allows one to conduct a simple search by entering the name of the adviser and the firm he or she is registered with, which provides a public report about any prior customer complaints or regulatory concerns that an investor should know about. A separate search can also be conducted against the firm itself, which is normally named for its negligence in a lawsuit alleging that an account was not properly supervised.

Malecki Law is a securities arbitration firm that provides representation to investors across the nation. The firm is headquartered in Manhattan’s financial district and ensures proper representation in each state, including Arkansas, whether actions are brought in state or federal court, or in arbitration. The majority of lawsuits to recover retail investment losses are brought within FINRA’s arbitration forum, which has advantages such as providing a faster and more efficient way to recover losses than in court. Malecki Law’s securities arbitration attorneys can help bring a faster recovery by ensuring that seniors and other investors with serious medical issues apply for expedited case status from the very outset of filing a claim. Arbitration awards also provide few grounds for appeal, which means the case is typically over and payment is made within 30 days of the conclusion of an arbitration. Court proceedings, on the other hand, can take many years to conclude with all the levels of appeal that can happen. Seniors don’t have that kind of time, which is why arbitration is a preferred method of recovery. If you or any elder investors residing in Arkansas suffered financial losses in the markets and believe the account to have been mismanaged or poorly supervised, schedule a free initial consultation with Malecki Law, by calling (212) 943-1233, or emailing jenice@maleckilaw.com.