Los Angeles FINRA Securities Attorneys

Welcome to Bakhtiari & Harrison, your premier Los Angeles FINRA securities attorneys. Our team is dedicated to representing investors and financial advisors in FINRA arbitration, ensuring that your rights are protected and your interests are vigorously advocated for. At Bakhtiari & Harrison, we understand the complexities of the financial industry and the unique challenges faced by investors in Los Angeles’ diverse and dynamic market.

Serving the Diverse Communities of Los Angeles

Los Angeles is renowned for its cultural diversity, with vibrant neighborhoods like Beverly Hills, Santa Monica, Koreatown, Pacific Palisades, Brentwood, and more. This diversity enriches the city but also presents unique challenges. Unscrupulous financial advisors may exploit cultural and linguistic affinities to target investors from specific communities. At Bakhtiari & Harrison, we are acutely aware of these risks and are dedicated to protecting all investors, regardless of their background.

Neighborhood Highlights

Beverly Hills: Known for its luxury real estate and high-end lifestyle, investors here are often targeted with promises of exclusive investment opportunities. Many wealthy individuals, including celebrities, actors, and musicians, call Beverly Hills home, making it a prime target for fraudulent schemes.
Santa Monica: This beachfront city attracts investors looking for sustainable and eco-friendly investments. The area’s appeal to affluent individuals, including professional athletes and entertainment industry professionals, increases the risk of being targeted by unscrupulous advisors.
Koreatown: A densely populated neighborhood with a significant Korean-American population, where language barriers can be exploited by unethical advisors. Investors here may be targeted due to cultural and linguistic ties.
Pacific Palisades: Home to affluent families and professionals, this area is often targeted by advisors promising high returns on low-risk investments. The picturesque setting attracts many high-net-worth individuals, including actors and executives.
Brentwood: Known for its affluent residents and serene environment, Brentwood investors often seek stable, long-term investment opportunities. The neighborhood is a preferred residence for many celebrities and high-profile individuals, making them potential targets for financial fraud.

Understanding California Securities Code Violations in Trading Securities

In the complex world of securities trading, adherence to legal and ethical standards is paramount. California has established a robust legal framework to ensure the integrity of its financial markets and protect investors from malpractices. The following will delve into some common violations under the California Securities Code, including suitability, unauthorized trading, misrepresentations, failure to disclose, and unfair business advantage.

Suitability in California Securities Law

One of the fundamental principles under the California Securities Code is the requirement for investment advisers and brokers to ensure that their investment recommendations are suitable for their clients. According to California Corporations Code § 25216, advisers must consider the client’s financial situation, investment objectives, and risk tolerance when making recommendations. This “suitability” standard mandates a thorough understanding of the client’s needs and the characteristics of the investments being recommended.

A violation occurs when a broker or adviser recommends unsuitable investments, failing to consider the client’s unique circumstances. Such actions can lead to significant financial losses for the client and potential legal liability for the adviser. The California suitability requirement is integral to protecting investors from inappropriate and potentially harmful investment strategies.

Unauthorized Trading in California

Unauthorized trading is explicitly prohibited under California Corporations Code § 25235. This section mandates that brokers obtain explicit consent from clients before executing trades on their behalf. Unauthorized trading involves executing transactions without the client’s knowledge or approval, breaching the fiduciary duty that brokers owe to their clients.

This violation can result in severe financial consequences for the client and disciplinary action against the broker, including fines, suspension, or revocation of their license. Ensuring that clients are fully aware of and approve all transactions is critical to maintaining trust and compliance with California securities regulations.

Misrepresentations Under California Securities Law

California Corporations Code § 25401 addresses misrepresentations and omissions of material facts in the sale of securities. Brokers and advisers are prohibited from making false statements or omitting crucial information that could affect an investor’s decision-making process. Misrepresentations can include false claims about the financial health of a company, the risks associated with an investment, or the expected returns.

Investors rely on accurate and complete information to make informed decisions. Any deviation from this standard undermines market integrity and can lead to significant investor harm. Violations of California § 25401 can result in civil liabilities, including rescission of transactions and monetary damages.

Failure to Disclose Material Information

Failure to disclose material information is closely related to misrepresentations and is governed by the same section, California Corporations Code § 25401. This provision requires full and fair disclosure of all relevant information that an investor would need to make an informed decision. Failure to disclose such information is considered fraudulent and deceptive.

Material information can include details about the financial performance of an investment, potential conflicts of interest, or any other fact that could influence an investor’s decision. Transparency is essential in the securities industry, and failure to uphold this standard can lead to legal action and penalties.

Unfair Business Advantage in California

Unfair business practices in the securities industry are addressed under California’s Unfair Competition Law (UCL), Business and Professions Code § 17200. This broad provision prohibits any unlawful, unfair, or fraudulent business acts or practices, including those in the securities sector.

Unfair business advantage can manifest in various forms, such as insider trading, market manipulation, or exploiting non-public information for personal gain. These practices undermine market fairness and investor confidence. Violations of California § 17200 can result in injunctions, restitution, and civil penalties, providing robust protection for investors and maintaining market integrity.

Common Code Violations in Trading Securities

Several other common violations under the California Securities Code relate to trading securities, including:

Churning: Excessive trading in a client’s account primarily to generate commissions for the broker, violating fiduciary duties as outlined in California Corporations Code § 25218.
Front-Running: Brokers executing orders on a security for their own account while taking advantage of advance knowledge of pending orders from their customers, which can violate California Corporations Code § 25216(a).
Ponzi Schemes: Investment frauds that pay returns to earlier investors from the new capital contributed by newer investors, rather than from profit earned, falling under fraudulent schemes addressed by California Corporations Code § 25401.
Insider Trading: Trading a public company’s stock or other securities based on material, non-public information about the company, violating fair market practices as described in California Corporations Code § 25502.
Failure to Supervise: Supervisors failing to adequately oversee the actions of brokers, leading to various forms of misconduct, which is addressed under California Corporations Code § 25216(c).

High-Profile Ponzi Schemes in Los Angeles

Los Angeles has seen its share of Ponzi schemes, where fraudulent schemes promise high returns with little to no risk, using funds from new investors to pay earlier investors. These schemes often target specific communities, taking advantage of cultural and linguistic ties.

The Tamkin Fraud Allegation Scheme

One significant case is the Tamkin fraud allegation scheme. In March 2023, Attorney General Rob Bonta announced an indictment against David Tamkin, a Beverly Hills resident, for operating an $8 million Ponzi scheme. Tamkin allegedly promised investors lucrative returns through real estate investments, but instead used the funds to pay off earlier investors and finance his lavish lifestyle. This case highlights the importance of due diligence and skepticism towards investment opportunities that seem too good to be true. You can read more about this case on the California Attorney General’s website.

The Zach Horwitz Allegation

Another notable case involves Zach Horwitz, an aspiring actor who orchestrated a $690 million Ponzi scheme. Horwitz allegedly claimed that his company, 1inMM Capital LLC, had licensing deals with HBO and Netflix. He used these false claims to attract investors, promising high returns on short-term loans. Horwitz used the funds to repay earlier investors and support his extravagant lifestyle. This case serves as a stark reminder of the potential for fraud in seemingly legitimate investment opportunities. For more details, refer to the New Yorker article.

The City National Bank Allegation

City National Bank is currently facing a lawsuit for nearly $800 million over allegations of facilitating a Hollywood Ponzi scheme. The scheme involved the misuse of investor funds intended for film and television projects. Investors claim that the bank ignored red flags and allowed the fraudulent activity to continue. This case underscores the importance of vigilance and the need for robust oversight in the financial industry. For further information, see the Los Angeles Times article.

Understanding the FINRA Arbitration Process

The Financial Industry Regulatory Authority (FINRA) arbitration process is a crucial mechanism for resolving disputes in the securities industry. FINRA arbitration provides a pathway for investors to recapture losses from a FINRA member firm or a FINRA associated member. Here’s a detailed overview of what you can expect:

Filing a Claim

The process begins with the filing of a claim, detailing the nature of the dispute and the relief sought. This claim should be comprehensive, including all relevant facts, allegations, and supporting documents.

Response

The respondent, usually the brokerage firm or financial advisor, files a response to the claim. This response will address the allegations made and may include defenses and counterclaims.

Arbitrator Selection

Both parties select arbitrators from a FINRA-approved pool. The panel typically consists of three arbitrators, chosen for their expertise and impartiality. This selection process is critical, as the arbitrators will ultimately decide the outcome of the case.

Prehearing Conferences

Initial conferences are held to establish procedural rules and schedules. These conferences help streamline the process and ensure that both parties are prepared for the hearings.

Discovery

Both parties exchange relevant documents and information during the discovery phase. This phase is essential for building a strong case, as it allows both sides to gather evidence and identify key issues.

Hearings

Formal hearings are conducted where evidence is presented, and witnesses may be called. During these hearings, both parties have the opportunity to present their case, cross-examine witnesses, and make legal arguments.

Award

After the hearings, the arbitrators render a binding decision. This decision, known as an award, is final and enforceable. If you are dissatisfied with the outcome, there are limited grounds for appealing the decision.

Common Causes of Action in FINRA Arbitration

Investors and advisors often encounter a variety of issues that lead to FINRA arbitration. Some of the most common causes of action include:

Breach of Fiduciary Duty: This occurs when a financial advisor fails to act in the best interests of the client, violating their duty of loyalty and care.
Misrepresentation and Omissions: Providing false information or failing to disclose material facts can lead to significant investor losses.
Unsuitable Recommendations: Advising investments that are not appropriate for the client’s financial situation and goals can result in substantial financial harm.
Churning: Excessive trading in a client’s account to generate commissions is a clear violation of fiduciary duty.
Unauthorized Trading: Executing trades without the client’s consent is a serious breach of trust and can lead to severe financial consequences.

Why Choose Bakhtiari & Harrison?

At Bakhtiari & Harrison, we bring a wealth of experience and a deep understanding of the financial industry to every case. Our commitment to our clients is unwavering, and we pride ourselves on providing personalized, effective legal representation. Whether you are an investor seeking redress for financial losses or a financial advisor navigating the complexities of FINRA arbitration, we are here to help.

Conclusion

Los Angeles’ vibrant and diverse communities are both a strength and a potential vulnerability when it comes to financial investments. At Bakhtiari & Harrison, we understand these unique dynamics and are dedicated to protecting investors from unscrupulous advisors and fraudulent schemes. Our expertise in FINRA arbitration ensures that your rights are upheld and your interests are safeguarded.

For more information or to schedule a consultation. Trust Bakhtiari & Harrison to be your advocate in the financial world. We represent victims of financial and investment fraud throughout California, including Beverly Hills, Hidden Hills, Los Angeles, Orange County, Pacific Palisades, Palm Springs, Pasadena, San Diego, San Francisco, and other locations. We will work tirelessly in pursuit of financial compensation for your investment losses.