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Securities Arbitration Attorneys may Invoke Industry Rules and Regulations to Help Prove their Case

We recently filed a FINRA arbitration on behalf of a professional athlete. His story is a tragic one. He and his wife were swindled out of the majority of their assets when they placed their money in the hands of financial advisors who, in turn, invested the assets in a Ponzi scheme. We brought claims for breach of contract, negligence, common law and statutory fraud, breach of fiduciary duty and violations of the Texas Securities Act. In our FINRA arbitration filing, we cited many industry rules and regulations which support our case. In this and in succeeding blog posts, I will discuss some of these industry rules and regulations. FINRA Rules 2010 and 2020 require that all FINRA members "observe high standards of commercial honor and just and equitable principles of trade" and prohibit such members from "effect[ing] any transaction in . . . any security by means of a manipulative, deceptive or other fraudulent device or contrivance." We will ask the securities arbitration panel to hold all parties who had a duty to properly manage and oversee our clients' accounts responsible for failing to observe such "high standards of commercial honor." If an investor is put into a security by means of manipulation, deception, distortion or misrepresentation/omission of material fact, then these cited FINRA rules have been violated. It is only reasonable that the members of FINRA be required to comply with their own rules and regulations. If you are an investor that has suffered financial losses, you are encouraged to consult with a securities arbitration lawyer regarding how FINRA Rules 2010 and 2020, among others, may apply to your specific case.
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