San Diego, CAWith the collapse of the financial markets, many people are concerned about potential stock losses, and with good reason. According to Ron Marron, founder of Investors Advocates, some investors have money in accounts that are too risky to be suitable investments--they may wind up as stock market losses. Sadly, they may not realize this until a lot of their money is gone.
"With variable annuities, the sub accounts are usually in progressive mutual funds—they have a lot of market exposure," Marron says. "A lot of mutual funds have a lot of market exposure as well. They can be very, very risky, especially for retirement accounts or people that are older. Those investors should not be in variable annuities or mutual funds that have market exposure." The reason being that the older investor cannot afford to lose money that is meant for retirement, so the money should be in safe, stable investments.
Unfortunately, some investors are not aware that they have money in risky accounts.
"They just see that their account is going down, but they have little idea of what is going on," Marron says. "They don't know what their investments are in because the brokers and financial advisors don't explain it to them. There's a doctrine known as the suitability doctrine. If brokers place people in unsuitable investments and don't perform their fiduciary duties the way they are supposed to, they can be held liable."
Luckily, investors whose money has been put in unsuitable investments, including stocks, bonds, mutual funds, variable annuities and money market accounts, can file a Financial Industry Regulatory Authority (FINRA) arbitration claim to get their money back. Marron represents clients from across the country in their arbitration claims, and says that arbitration is a worthwhile means of recovering lost funds.
"Arbitration tends to go more quickly and be much more informal [than a lawsuit]," Marron says. "Once arbitration is awarded, it's very difficult for the defense to appeal. They can't tie you up for years like they can in court."
However, not everyone who loses money should file an arbitration claim. "If investors knew that they were in risky investments, they can't blame the broker for that," Marron says. "But, if they weren't warned about the risks, if there was not sufficient disclosure, and the money is in retirement accounts, they can file a claim."
Marron notes that a lot of teachers are taken advantage of by unethical financial advisors. "Teachers have to have 403(b)s and they are sold mutual funds or annuities which are either very risky or very expensive, with a lot of fees involved. Teachers wind up purchasing annuities with several layers of fees. The brokers get commissions and sometimes become good friends with the people administering the plans, which can lead to a conflict of interest."
Those people who thought their money was in safe, stable investments only to learn over the past few weeks that their investments were unsuitably risky can file a FINRA arbitration claim to recover lost money. The first step in doing so is to contact an attorney who is experienced in filing FINRA arbitration claims.
Investors Advocates has recovered tens of millions of dollars in investment losses on behalf of investors. If you have investment losses in stocks, bonds, mutual funds, variable annuities and even money market accounts, call the Investors Advocates, who represent people around the country.