Some persons - even some lawyers - are of the mistaken belief that investors must demonstrate that a broker or firm committed securities fraud in order to seek recovery. This mistake may stem from the narrow requirements placed on class action securities claims, which must now be filed by demonstrating fraud under Federal securities laws in Federal Court.
We all owe a duty to others not to drive recklessly, light a fire too close to a neighbor's house or otherwise act in a negligent manner. This also applies to financial firms, stockbrokers and other advisors who can also be held liable for their negligent actions or inactions.
Many persons fail to file claims against a financial advisor or firm because they do not want to accuse that person or firm of fraud or to otherwise reflect on their licenses or character. Yet, few of us would fail to seek recovery of our losses if our neighbor backed into our automobile or caused our house to burn.
Generally, such claims against advisors and their firms are determined in private arbitration and lawsuits are rarely filed. This process involves less participation by the investor than in court cases and the matter is usually resolved in less than a year.
Anyone can make a mistake, but we are all responsible for our actions (or inactions). If negligence by a broker or firm caused losses to an investor the broker or firm should reimburse the investor for those losses. Not all losses are caused by negligence or other wrongdoing, but why not seek (free) legal advice if you have sustained significant losses.