With trillions of dollars being manipulated by investment advisors and brokerage firms on a daily or even hourly basis, the magnitude of the influence of financial markets on world economies is nearly incomprehensible. Every developed country in the world has a financial market which bears influence on every other country’s financial market. Each country has specific laws and regulations which are governed by certain regulatory agencies. Here in the U.S., the major securities watchdog agency is the Securities and Exchange Commission (SEC). This system of interconnectedness has fostered the development of investment firms of titanic proportions with global subsidiaries.
Regrettably, the scope upon which these companies operate often makes it quite difficult to regulate. It also opens up investment firms to wide-scale regulatory infractions. Even when regulatory agencies find and address cases of fraud, supervisory failures, and so forth, the penalty for committing these acts results in little more than a fine. Even with fines that stretch into the millions of dollars range, for these gigantic companies the fines amount to nothing more than the cost of doing business. The SEC and other agencies may work diligently to curtail illegal activities by investment firms and financial advisors, but the profits made by committing regulatory infractions is often too great to ignore for many companies. A simple inquiry of the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck or an internet search on any given firm or investment advisor will often reveal incident after incident of malfeasance on the part of many of these firms and advisors.
It is a heinous practice that some firms and advisors commit these acts against companies or extremely wealthy investors who are looking to increase their profits. Yet, when the average investor or, or worse still - the elderly investor, places their trust in these firms only to possibly lose their life’s saving as a result of these inappropriate actions, it is especially egregious. This is exactly what one Oppenheimer & Co., Inc. investment advisor has done.
A recent arbitration action has been filed with FINRA on behalf of an 85-year-old woman. The woman asserts that her investment advisor “churned” her investment accounts. Churning is the act of excessively trading an account so that the advisor can charge higher fees and increase his commission. Although not illegal, churning is not an acceptable or advisable practice on behalf of someone who is retired, elderly, or an investor whose investment objective is conservation.
According to the arbitration Statement of Claim, the claimant states that she needed to maintain the funds that were invested into the accounts of her and her deceased husband. Although the investment advisor was aware of this, he engaged in repeatedly investing their money in risky stocks that lacked diversification with the intent of generating greater personal commissions. Diversifying investments can often mitigate financial losses, so failing to do so on the part of an advisor puts his clients’ funds at great risk. The Statement of Claim continues on to state that the advisor recommended an “alpha” account which presents high risk to the investor as a means to cover up his excessive trading. This advisor’s actions resulted in losses of $700,000 for the elderly woman.
The Blum Law Group specializes in helping people who have been victimized by brokers or investment firms. If you believe you have suffered financial losses as a result of the actions of your Oppenheimer investment advisor or due to other supervisory failures on the part of Oppenheimer & Co., Inc., please give us a call at 1-877-STOCK-LAW for a free consultation.