Investment Fraud Lawyers


The investment fraud lawyers at Rikard & Protopapas represent investors nationwide who have been wronged by brokers and financial advisors. Let us learn about your situation and begin the process of recovering your financial losses.

Understanding Investment Fraud

Brokers and financial advisors have a legal obligation to act in your best interest. In the process, they would earn profits, and there is nothing inherently wrong with it. The problem arises when the broker gets greedy, and puts their interest ahead of yours, so they can make more money at your expense. Then, they may have violated any one of a number of federal securities laws or self-regulatory organization rules.

Your broker can break the rules in a number of ways. They could try to directly profit at your expense by doing something that can run up your costs and put your money in their pocket. Alternatively, they could fail to tell you how much money they are taking from you. A broker may simply be trying to earn a commission without regard for your particular investment profile or financial needs.

The common denominator in investment fraud cases is that customers are shocked to learn that their broker has found a way to take their hard-earned money or risk their financial stability. The other thing that all cases have in common is that you do have recourse when you have hired an experienced investment fraud lawyer.

Types of Unsuitable Investment Products We Handle

Here are some of the cases that we manage on behalf of our clients as we work to help you get back the money that you lost.

Premium-Financed Indexed Universal Life Fraud

Brokers and insurance agents have been selling large numbers of these life insurance policies in recent years for one simple reason; they make a lot of money in fees and commissions. The problem is that these policies may be in the broker’s best interest, but they are not in their client’s.

The high initial fees may mean that the customer needs many years to catch up to where they otherwise would be if they had a term policy and invested the rest of the money.

In addition, brokers are not always upfront with their clients about the fees that they are paying. Clients end up surprised when they receive a bill for a higher premium than they thought and are told that they either need to pay it or forfeit the policy entirely. You may be able to sue if you suffered losses from a IUL product that was pushed upon you by a broker.

Ponzi schemes

The Ponzi scheme goes way back in history, even before Charles Ponzi carried out a fraud so notable that it was forever named after him.

A Ponzi scheme is when a promoter promises large returns and uses the money from subsequent investors to pay the initial ones. In the meantime, the promoter is taking money for themselves. In recent years, Bernie Madoff perpetrated one of the largest Ponzi schemes in history.

It is possible to get some of your money back. Your attorney may be able to claw back money from investors who were paid. You may also be able to sue others who helped the fraudster execute their scheme.

Non-public traded REITs

Not every real estate investment trust is traded on a public stock exchange. Some are private (making them exempt from SEC registration), and others simply do not trade. What these instruments have in common is that investors pay high fees to buy these securities.

Non-public REITs may also lack transparency that can tip investors off to possible fraud. The problem is that brokers may have a financial incentive to sell you these products because they are making a lot of money themselves. They may not perform the proper suitability analysis.

Investment advisers may even be in breach of their fiduciary obligations to you by recommending or selling you these REITs. Our lawyers investigate instances of REIT fraud.

Variable annuities

Variable annuities are another product that earns brokers a handsome amount of money for selling it. They may get a large upfront payment that could equal almost the entire premium that you pay for the first year of the policy.

The problem is that the broker is not always making full disclosure of both the fees and the risks of variable annuities. They may also be recommending an unsuitable investment product, especially when you are an older investor with lower risk tolerance and a more immediate time horizon.

Variable annuities are complex products that customers do not always understand at the time of purchase. They are often dismayed when they learn later that the variable annuity is not performing as they thought, or that they owe more in premiums.


For years, brokers sold bonds that were used to raise capital to purchase life insurance policies. The problem was that life insurance premiums were rising, and the insured people were living too long.

Along the way, the issuers were profiting handsomely and paying large sums of money to related entities. Brokers were also paid well to sell these bonds. The issuers needed to sell more bonds to keep paying returns to prior investors, making this a Ponzi scheme.

Brokers were selling L-bonds to investors without regard to their suitability and through a multitude of misrepresentations. Our lawyers have been successfully filing claims and lawsuits against brokerages that recommended and sold these bonds.

Broker Misconduct Claims

Our law firm also files arbitration claims against brokers who have cost you money through their misconduct. We handle the following types of broker misconduct claims through the FINRA arbitration process.

Recommending unsuitable securities

Although brokers may not owe you a fiduciary duty when they do not have control over your account, they are still bound by FINRA rules. The main rule that governs a broker’s recommendations is FINRA Rule 2111. This is the suitability rule, which has undergone many revisions over time.

The suitability rule requires that a broker consider your own individual situation when recommending a security. It operates from the premise that not every trade fits every investor the same. For example, some riskier securities may not be suitable for an investor who is nearing retirement and wants to preserve their own investment capital.

There are three levels of suitability tests that a broker must conduct:

  1. The broker must have a reasonable basis to believe that the investment is suitable for at least some customers. This part of the test requires the broker to do some due diligence on the investment itself before recommending it.
  2. The broker must perform a customer-specific suitability analysis to ensure that the specific investment is suitable for the customer in light of their own investment profile. One example of a violation of this suitability test was brokers recommending GWG L-bonds for older investors in spite of their risks.
  3. The broker must perform a quantitative suitability test that determines whether a series of recommended transactions are not excessive or unsuitable for the customer when taken together in light of the customer’s investment profile. This test applies when a broker has control over the investor’s account. It is thought of as an anti-churning rule.

Broker negligence

Some brokers may not owe you a fiduciary duty, but they are still bound by common law rules of negligence. The broker must act as a reasonable stock broker would under the circumstances. This translates to a broker owing you a duty of care.

In a broker negligence case, you do not need to prove that the broker had any intent to harm you. All you need to show is that they were essentially careless, either not doing the necessary due diligence or making other mistakes related to your account.

Churning and excessive trading

Brokers may be paid in the form of commissions or markups or markdowns on securities. Your broker may have an interest in trading as much as possible on your behalf, even though it makes little economic sense, and it is quantitatively unsuitable.

A broker commits churning when they have engaged in trading on behalf of the client with the sole purpose of generating commissions for themselves.

Failure to disclose material facts about investments

FINRA rules require a broker to disclose material facts about an investment to a customer, including the fees that the customer needs to pay and the relevant risks. Some brokers may make affirmative misstatements, while others may simply withhold information in an attempt to get the customer to purchase the security.

Failure to supervise registered representatives

A broker-dealer has an obligation to adequately supervise its registered representatives. In many cases, when an individual representative has committed misconduct, the broker-dealer may also end up liable and face FINRA action for failure to supervise a registered representative.

The broker-dealer must have reasonable supervisory procedures in place. If a representative committed a violation, FINRA may look at the role that the broker played in their transgression.

Lack of diversification

Portfolio diversification is what helps you weather a down market as an investor. There are several ways that your account could be over-concentrated, and it is not just when you put all your money into one stock. Brokers must be conscious of your own investment profile when they are making recommendations, including how much exposure you have to a certain sector or type of investment.

Unauthorized trading

Brokers need explicit authorization to exercise discretionary authority in the customer’s account. Some brokers may trade on behalf of a customer, or they may place trades in the customer’s account without permission. Brokers could also commit unauthorized trading by exceeding the scope of their discretionary trading authorization.

Our Investment Fraud Lawyers Can Help You

Our lawyers will launch an investment fraud investigation under two circumstances:

  • You contact us and report that you personally were the victim of investment fraud
  • We learn that a broker may have potentially been guilty of widespread investment fraud that could have affected many clients

In numerous recent instances, brokers have promoted and sold dubious investments, and their customers were left holding the proverbial bag. Our lawyers have a successful track record of recovering on behalf of clients in many of these cases.

Our investment fraud law firm stands ready to take the experience that we have gained from helping clients and apply it to similar cases in which brokers recommended and sold similarly suspect investments.

You Can Take Legal Action Against a Broker or Advisor

When a broker has violated FINRA rules, and it has cost you money, you have the right to take legal action. Your right may not be the same as customers who have been defrauded in other contexts.

For decades, the securities industry has forced its clients to arbitrate because they have stuck a clause in customer agreements that requires it. Brokers think that arbitration cuts their legal costs and allows them to exert some control over the process which could potentially reduce the amount of money that they pay customers.

While mandatory arbitration is not ideal, it also does not mean that your legal rights are completely stripped from you. The benefits of arbitration are:

  • You have a say in selecting the arbitrator.
  • Arbitration is somewhat quicker than full-scale securities litigation.
  • Arbitration is a more flexible and informal process than a lawsuit.
  • You are still able to build your case through discovery, which can put the broker in a position where they realize that they need to settle your case.
  • The arbitrator can still decide to award you punitive damages if the broker’s conduct was bad enough.
  • There is an extensive body of FINRA rules that govern the arbitration process and provide some measure of predictability for your case.

First, you need to contact an attorney who has experience in the FINRA arbitration process. Not every attorney has the knowledge of the securities industry and FINRA rules that are necessary to make the strongest arguments on your behalf.

The attorneys at Rikard & Protopapas have a track record of fighting for clients who were defrauded by their brokers, and we can help you.

Contact an Investment Fraud Attorney Today

If a representative that you trusted committed investment fraud, you may be able to get your money back. At Rikard & Protopapas, we work to hold brokers accountable when their representatives have failed to follow FINRA rules, costing you hard-earned money.

You can schedule a free consultation to speak with a lawyer by calling us today at (803)-805-7546 or by sending us a message online.



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