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Securities Litigation

Commercial Litigation Legal Representation

Securities litigation is very complex and requires highly specialized representation with much at stake. Exposure of concerns within the securities industry have led people to pay more attention and question how their brokers do business which has ultimately led to more securities disputes across the U.S. Often times mediation or arbitration is required for a resolution and the experienced business attorneys at Loftus & Eisenberg can help.

Securities Disputes Resolution

Investment losses often times cause securities disputes. In some situations, a brokerage firm or financial advisor may be held liable and losses may be recovered. In many cases, when investors engage with a brokerage firm, an arbitration agreement is required necessitating them to use the Financial Industry Regulatory Authority (FINRA) arbitration process. Furthermore, SEC Rule 12 allows arbitration of securities disputes.

When a client hires a broker and that person is put in charge of that client’s investment capital, there is an expectation that the broker is to act upon the client’s best interest first and foremost in regards to investments. In situations when a broker purposefully betrays this duty, the broker may be committing securities fraud. Under the Illinois Securities Law of 1953 it is forbidden to engage in a transaction or course of business in connection with the purchase or sale of securities that “tends to work a fraud or deceit” on a purchaser or seller and brokerage firms who break this law are open to fraud claims.

“Churning” is a common type of investment fraud that transpires when a broker buys and sells securities on commission without taking into consideration if these transactions are in the best interest of the client. By the same token, if a broker exposes the client to unjustifiable risk that results in substantial losses, it could also constitute fraud.

In addition, under common law, there are numerous other causes for securities disputes that may arise, including misrepresentation, fraud, negligence, failure to supervise, breach of fiduciary duty, unauthorized trading, and over-concentration.

To take legal action, each of these causes require proof of numerous elements. For instance, under Illinois common law, a plaintiff asserting fraud must prove the following:

  • a misrepresentation or an incorrect statement of material fact
  • that the person who made the statement did so, knowing it was false
  • the statement was made with intent to produce action by another based on the confidence on the statement.
  • that the plaintiff acted in dependence that the statement was true
  • losses were caused by the reliance on the statement

Securities disputes are usually quite involved and legal representation matters. The business lawyers at Loftus and Eisenberg can help clients in Chicago and other areas of Cook County address and resolve these high-stakes conflicts.

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