Remedies for Sales Practice Violations - Transcript

Sales practice violations can significantly impact investors, eroding their trust and causing financial losses. While FINRA conduct rules do not explicitly grant a private right of action, they play a crucial role in holding brokerage firms accountable. These rules set the industry standard, forming the foundation for civil claims in court, and arbitration like breach of contract, breach of fiduciary duty, Reg BI violations, and negligence. At Malecki Law, we have a deep understanding of these rules and the remedies available to those harmed by sales practice violations.

Many investors are initially told that FINRA conduct rules do not provide a private right of action. While this is technically true, it is not the whole story. These rules establish the standard of care that brokerage firms owe to their clients and are often cited in civil claims as evidence of negligence or breach of contract.

For example, just as a cracked sidewalk may lead to a negligence claim against the property owner, a brokerage firm’s failure to follow FINRA rules can be used to demonstrate a breach of industry standards. Courts and arbitration panels frequently reference these rules to assess whether a firm’s actions were consistent with its duties to the investing public.

Sales practice violations encompass a wide range of misconduct. Common examples include:

• Regulation Best Interest: Recommending investments that are not aligned with the investor’s best interests, including their financial goals and risk tolerance.
• Misrepresentations and Omissions: Providing false information or failing to disclose key details about an investment.
• Churning: Engaging in excessive trading to generate commissions.
• Unauthorized Transactions: Executing trades without the investor’s consent.

These violations often result in financial harm and can undermine an investor’s confidence in the securities industry.

Investors harmed by sales practice violations have several avenues for seeking redress. These include:

• FINRA Arbitration: Investors can file claims through FINRA’s arbitration forum, which offers a streamlined process for resolving disputes with brokerage firms.
• Civil Lawsuits: Breach of contract and negligence claims can be pursued in court, with FINRA conduct rules serving as a benchmark for industry standards.
• Regulatory Actions: FINRA and other regulatory bodies can impose sanctions on firms and individuals found to have violated sales practice rules.

While these remedies vary in scope and process, they all aim to hold firms accountable and provide relief to harmed investors.

Bringing a case based on sales practice violations requires experienced legal counsel. An untrained lawyer or layperson may overlook the significance of FINRA rules and their application in civil cases. At Malecki Law, we leverage our in-depth knowledge of securities laws and industry standards to build compelling cases for our clients.

If you believe you’ve been harmed by a sales practice violation, Malecki Law can help. Our team of securities attorneys has the dedication, skill, and knowledge to effectively handle your case, whether it involves FINRA arbitration, civil litigation, and regulatory proceedings. We are committed to protecting your rights and recovering the compensation you deserve. Contact Malecki Law at (212) 943-1233 or reach out online to schedule a consultation.

Transcript:

[Normally] the sales practice violations do not have embedded within them private rights of action so an untrained lawyer or a layperson who is dealing with a broker dealer the first thing that they’re going to hear about the FINRA conduct rules is that there’s no private right of action and that’s true but that’s not the whole story the way that the FINRA conduct rules are applicable in cases against brokerage firms is that they form the basis of breaches of contract and negligence just the way you know let’s say somebody slips and falls on the sidewalk you know the sidewalk is supposed to be even and not cracked and and if somebody trips over a cracked sidewalk they may have a case against the person that was required to maintain the sidewalk because that is common standard in practice well following the FINRA conduct rules is also common industry practice so in any contract and in any negligence case those conduct rules are read in as the industry standard the duty that they have to the investing public so they’re very important rules they form the basis of not only civil arbitrations and cases but also regulatory actions brought by FINRA.