What Types of Options Cases Are Commonly Litigated? - Transcript

Options trading can provide investors with flexibility and potential for profit, but it also carries substantial risks. When brokers fail to adequately disclose these risks or mismanage strategies, investors can suffer significant losses. At Malecki Law, our New York securities lawyers are experienced in litigating options cases, working to recover damages and hold financial professionals accountable for investors’ losses.

Options trading involves contracts that grant the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price before a specific expiration date. While these trades can be profitable, they are often complex and involve a high degree of speculation.

The risks of options trading include:

• Market Volatility: Rapid changes in market conditions can lead to substantial losses.
• Complexity of Strategies: Multi-leg strategies such as spreads or straddles can be difficult for many investors to fully understand.
• Potential for Significant Losses: Unlike traditional stock investments, some options strategies carry the potential for losses that exceed the initial investment.

Given these risks, brokers have an obligation to ensure that the strategies they recommend are in their clients’ best interest and that all associated risks are disclosed and explained. When brokers misrepresent these factors or pursue strategies that make no sense for an investor’s objectives and risk tolerance, they can be held liable for the resulting losses.

Options cases typically arise when brokers or financial professionals engage in misconduct, such as:

• Misrepresentation of Risks: Failing to accurately disclose the risks associated with a particular options strategy. For instance, presenting a high-risk strategy as low-risk could lead an investor to make trades they would otherwise avoid.
• Unsuitable Recommendations: Recommending options strategies that are inappropriate given an investor’s financial goals, risk tolerance, or level of sophistication.
• Poorly Designed Strategies: Developing options strategies that are overly complex or inherently flawed, leading to unnecessary losses.

For example, an investor with conservative financial goals and/or minimal investing experience overall, should likely not be placed in a high-risk, speculative options strategy. If a broker creates a strategy that exposes the client to significant losses without a clear benefit, the investor may have grounds for a legal claim.

The primary goal in options litigation is to restore the investor to the financial position they were in before the misconduct occurred. This can involve recovering:

• Financial Losses: Reimbursement for losses directly resulting from the broker’s actions.
• Lost Opportunities: Compensation for profits that the investor could have earned had their funds been properly managed.
• Associated Costs: Recovery of fees, commissions, or other expenses tied to the inappropriate trades.

At Malecki Law, we work with forensic accountants and financial experts to calculate the full extent of your losses and present a strong case for damages. Our team understands the nuances of options trading and how to effectively argue these cases in arbitration or court.

Options trading cases often involve complex strategies and financial instruments that require detailed investigation and analysis. At Malecki Law, we leave no stone unturned in identifying evidence of misconduct and building a compelling case on your behalf. Whether your losses were caused by misrepresentation, unsuitable recommendations, or flawed strategies, our attorneys have the experience and dedication to pursue justice.

If you’ve experienced significant losses because of misrepresented risks, unsuitable recommendations, or poorly designed options strategies, Malecki Law can help. With over 20 years of experience in securities law, our attorneys are committed to protecting your rights and recovering the damages you deserve. Call us today at 212-943-1233 to speak with a New York securities law attorney, or complete the firm’s confidential online contact form.

Transcript:

Cases you’re going to really look at the same damages you would in any other case how can I be put back in the position that I was in before I did these options now the way you’re going to have an options case in the first place is that somebody misrepresented the the risks involved with the option strategy the objectives of the strategy or created a strategy that really made no sense at all and that’s where you would have a case and be able to get damages in an options.