Question: What is the process to file a lawsuit against an unscrupulous financial advisor that my elderly parents have been working with for quite some time now? The bottom line is that this advisor has successfully “wiped out” most of my parents net worth.

Answer:  It depends of the type of financial advisor handling your parents’ money. If the advisor is a stockbroker, it’s likely your parents signed an arbitration agreement when they opened their account. This means they agreed in advance to file their case against the stockbroker and his employer in an arbitration forum and gave up their right to file their case in court.  Normally, the Financial Industry Regulatory Authority (“FINRA”) is the arbitration forum where your parents’ case would have to be filed.  Arbitration has both advantages and disadvantages but is less costly than filing an action in court and will likely get faster results. The arbitrators selected to hear the case can award your parents compensatory damages, punitive damages and attorneys’ fees– just like a jury can in court. For an overview of the FINRA arbitration process, click on this link: http://www.sbpllplaw.com/2011/04/an-outline-of-the-finra-arbitration-process-for-customer-broker-disputes/

If the advisor is not a stockbroker and your parents did not sign an arbitration agreement, they can file their case against the advisor and his employer in court. Whether they file their case in federal or state court depends on a number of factors including:

  • a) where your parents live
  • b) where the advisor lives
  • c) where the advisor’s employer maintains its principal place of business
  • d) how much money your parents lost, and
  • e) the legal causes of action asserted in the complaint.

Let me know if I can be of further assistance to you.

J. Michael Bishop, JD
Smiley Bishop & Porter, LLP
Atlanta, GA  30338

Filing a Lawsuit Against an Unscrupulous Financial Advisor was last modified: June 28th, 2018 by Phil Sanders