Is Your Broker the Greatest Risk to Your Portfolio?

Investors' Recovery Rate Reached 49% in FINRA Arbitrations

If you have taken the time to read this list, chances are you believe something is not right. If you sustained losses due to any of the above, you might have a claim.

Recent statistics reveal that investors have a much better chance of recovery now than they did in previous years. The Financial Industry Regulatory Authority (FINRA) indicated that the success rate in arbitration is now at 49%, up dramatically from prior years, when winning cases was only around 35%. Of course, these figures are only reflective of those cases actually taken to arbitration. Many more cases are settled prior to even going to a hearing on the matter, which is telling about the brokerage industry’s hiring practices and supervisory performance.

Awards have been dramatically increasing year over year, and we expect this trend to continue as long as arbitration panels are presented with stark evidence of broker fraud and the industry’s failure to properly supervise rogue brokers.

Park Street takes a qualitative approach to this practice area. Our Wall Street background affords the firm specific knowledge and skills to know what your broker has been up to with your money. Our legal experience affords you the opportunity to seek recovery of your losses.

As former Wall Street brokers, traders and investment advisors, we review your potential claim before deciding whether you have a case against your broker or the brokerage firm. Remember, your broker represents the firm’s interests, not yours!

If Park Street determines that you have a case, we often will offer to represent you on a contingency fee basis, meaning we only earn our fee if we recover your money. There is no cost for an initial consultation; so, if that little voice in your head is telling you that something is not right with your investment account and you lost more than $50,000, then contact Park Street today.

Call us today at 248-733-4502 or contact us below.

Click on the below links to review possible claims you may pursue to recover your losses.

  • Conflict of Interest
  • Breach of Fiduciary Duty
  • Churning
  • High Risk or Unsuitable Investments
  • Portfolio Check-up

    Brokers and securities advisors have the legal duty to operate in good faith toward customers and to act in the customer’s best interests. However, many brokers and brokerage firms have revenue sharing agreements with mutual funds, which can create a conflict of interest.

    This common conflict can result in the broker pushing one particular mutual fund to customers over other, perhaps more suitable investments because the broker receives a special financial incentive. Such actions by your broker can be a violation of the duty to put your financial interests before his or her own. This type of activity can cause higher expense ratios, poor performance, and sometimes be the direct cause of significant losses. If you suspect this activity and have suffered a significant financial loss, you should contact Park Street Legal immediately for a free case evaluation. Call 248-733-4502 for a free case evaluation.


    Unfortunately, breach of fiduciary duty is probably the most common customer claim against stockbrokers and their firms. Embracing their brokers as "experts" in the area of investments and money management, many customers rely heavily, sometimes entirely, on the advice and product recommendations of their brokers, which can often lead to problems for both brokers and customers. Courts have recognized the significant level of trust this places in the broker and have determined that brokers hold particular legal duties toward their customers, which are somewhat dependent on the element of control that the broker has over the customer’s account.

    Brokers and their brokerage firms are obligated to deal in good faith with their customers. Under some circumstances, some jurisdictions, including Michigan, require that a broker owes the customer a "fiduciary duty," which means that the customer’s interests must come before the broker's interests. This heightened relationship includes the duty to monitor changing markets for events that impact the customer’s interests and inform of all transactions that affect the customer’s interests with respect to the account under the broker's control.

    Do you have a breach of fiduciary duty claim? Call us at 248-733-4502 or fill out the form today. The initial consultation is free.


    Churning is an illegal and unethical activity that violates numerous federal securities laws. Wall Street’s self-regulatory body, the Financial Industry Regulatory Authority (FINRA), imposes a plethora of rules upon its brokers to prevent excessive trading for the broker’s gain. The rules governing such conduct are found in the "suitability" section of FINRA rules. Generally, churning activities violate the principles of "quantitative suitability."

    According to federal securities regulations, “quantitative suitability” requires a member firm or an associated person who has control over a customer account to have a reasonable basis for believing that a series of recommended transactions, even if suitable for that customer when viewed in isolation, are not excessive and unsuitable for the customer when taken together and viewed in relation to that customer's investment profile and risk tolerance.

    Establishing the element of "control" with respect to the customer’s account is essential to support a claim for churning. Even if it can be established that an account had in fact been churned, for liability to attach, the customer must prove that the broker had effective control over the account. Such control may be established through a document granting the broker control of the account or by showing that the customer relied so completely on the advice and recommendations of the broker that the broker was effectively responsible for the frequency of transactions in the account. Some common facts that support a claim of excessive activity, include our lawyers analyzing the following:

    • Turnover rate
    • Cost-equity ratio
    • Use of in-and-out trading in a customer's account

    Park Street can help customers recover these losses. Contact us today and we can provide you a free case evaluation to see if you have a claim.


    Claims for unsuitability are generally made under FINRA Rule 2090 (formerly, New York Stock Exchange Rule 405, the "Know Your Customer" rule). This rule says that a broker's first duty to a customer is to gather all of the necessary information that ensures the recommendations made to the customer are suitable in light of the customer’s circumstances and goals, which includes the customer’s financial situation, investment objectives, any future needs and risk tolerance. The broker must also know the facts surrounding the recommended investment to ensure a suitable match in light of the customer's suitability parameters. In certain circumstances, the broker may have a duty to refuse a customer’s order if the broker deems such order to be unsuitable for the customer, regardless of whether the order is marked solicited or unsolicited.

    To maintain this duty of suitability, brokers must continuously reevaluate and update the needs and financial condition of their customers. Relying on outdated information as the basis for current recommendations can create broker liability for losses that occurred as a result of unsuitable recommendations.


    Unsure if your broker or advisor is doing right by you? Maybe you’re just seeking an unbiased opinion on your asset allocation model; or perhaps you want an examination that confirms what you think you are paying is actually what you are being charged. Your broker and his firm have gone to great lengths to hide the real cost of doing business with them. How do we know? We are former Wall Street brokers and investment advisors.

    Depending on the state, your broker may only have a fiduciary duty to you under very specific circumstances. Wall Street interests have consistently impeded legislation that would impose basic fiduciary duties upon its brokers and investment advisors, allowing them to continue excessively profiting from their customer accounts without having to disclose conflicts of interest or put the customer’s interests first. It is a legal fight that has cost investors billions of dollars in fees and lost returns.

    The few hundred dollars you spend to consult with Park Street’s experts might save you tens of thousands in expenses, fees and investment losses or missed returns. Barring changes in current law, your broker and his firm will continue to serve their own interests before yours. Contact us today at 248-733-4502 to see if we can help you understand your options.

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