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In California, When Can I Sue My Stockbroker?

Investing in the stock market can be rewarding, offering the potential for substantial returns and long-term financial security. However, when things go wrong due to the actions or inactions of a stockbroker or financial advisor, it can lead to significant financial losses and emotional distress. If you find yourself in such a situation, you might wonder, “When can I sue my stockbroker in California?”

At Bakhtiari & Harrison, we specialize in representing investors who have been wronged by their stockbrokers or financial advisors. In this blog, we’ll outline the circumstances under which you can take legal action against a stockbroker in California and the steps involved in pursuing a claim.

Common Reasons to Sue a Stockbroker

  1. Misrepresentation or Fraud Stockbrokers and financial advisors are required to provide accurate information about investment opportunities. If they intentionally mislead you by providing false information or omitting critical details, you may have grounds for a lawsuit based on securities fraud. Our experienced securities fraud attorneys can help you navigate this complex legal area.
  2. Unsuitable Recommendations Your stockbroker has a duty to recommend investments that are suitable for your financial situation, goals, and risk tolerance. If they recommend high-risk investments without proper consideration of your circumstances, this may constitute an unsuitable recommendation, and you can sue for the resulting financial losses.
  3. Unauthorized Trading Stockbrokers must have your consent before executing trades on your behalf. Unauthorized trading, or “churning,” occurs when a broker makes transactions without your approval or engages in excessive trading to generate commissions. This practice is illegal and can be grounds for legal action.
  4. Negligence Brokers must exercise a reasonable standard of care when managing your investments. Failure to do so—such as neglecting to monitor your portfolio, failing to diversify investments, or ignoring important financial news—can be considered broker negligence, making the broker liable for any resulting financial losses.
  5. Breach of Fiduciary Duty As fiduciaries, stockbrokers and financial advisors are obligated to act in your best interest. If they prioritize their interests over yours, such as recommending investments that earn them higher commissions regardless of their suitability for you, they have breached their fiduciary duty. This breach can form the basis of a lawsuit.

California’s Legal Framework

In California, several state and federal laws and regulations protect investors from broker misconduct. These include:

  • California Securities Act
  • California Elder Abuse and Dependent Adult Civil Protection Act (for senior investors)
  • FINRA Rules and Regulations

Under these laws, you have the right to seek compensation for your financial losses through various legal avenues, including arbitration through the Financial Industry Regulatory Authority (FINRA) and litigation in state courts.

The Process of Suing a Stockbroker

  1. Consultation and Case Evaluation The first step is to consult with an experienced investment fraud attorney. At Bakhtiari & Harrison, we offer free consultations to evaluate your case and determine the best course of action.
  2. Filing a Claim Depending on the specifics of your case, we may file a claim through FINRA arbitration or in a state court. Arbitration is a common route for disputes involving stockbrokers and brokerage firms and can be faster and less costly than traditional litigation.
  3. Discovery and Evidence Gathering During the discovery phase, both parties exchange information and gather evidence to support their claims. This includes documents, emails, and testimony from experts and witnesses.
  4. Arbitration or Trial If the case goes to arbitration, a panel of arbitrators will hear the evidence and make a binding decision. In a court trial, a judge or jury will determine the outcome. Our attorneys at Bakhtiari & Harrison have years of experience in both arbitration and courtroom litigation, ensuring that you receive skilled representation.
  5. Award and Recovery If the arbitrators or court rule in your favor, you may be awarded compensation for your investment losses, including legal fees, and other damages.

Why Choose Bakhtiari & Harrison?

At Bakhtiari & Harrison,, we have a proven track record of successfully representing investors in California. Our deep understanding of securities laws and regulations, combined with our commitment to protecting our clients’ rights, makes us the ideal choice for your legal needs.

If you believe you have been wronged by your stockbroker or financial advisor, don’t hesitate to contact us at (310) 499-4732. We are here to help you navigate the complexities of securities litigation and arbitration, ensuring that you receive the justice and compensation you deserve.