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Experience. Skill. Results.

Andrew Whiteman is a Raleigh, North Carolina civil litigation attorney who has served clients since 1980. He specializes in representing plaintiffs in investment disputes and disability insurance claims.

Learn more about our investment law practice

 

Basics of Investment Claims

The lawyers at Whiteman Law Firm has been representing investors in securities claims for over 30 years. We represent individuals and businesses who have suffered financial losses due to fraudulent investment schemes sold by unscrupulous or inept investment promoters, stockbrokers, investment advisors or insurance salesmen.

We are experienced in handling cases involving the following types of misconduct:

  1. Misleading or fraudulent sales practices.
  2. Unsuitable investment recommendations.
  3. Account “churning” to generate excessive commissions.
  4. Failure to execute trading instructions.

If you have suffered losses due to the misconduct of an investment professional, you need competent attorney representation to help you recover your losses. Whiteman Law Firm assists investors to recover losses through litigation and arbitration. Our attorneys represent investors in all types of securities disputes. We handle everything from complex federal and state court litigation to individual customer arbitrations. We can review the facts of your case on a confidential, no-cost basis, and advise you on your options for recovering your investment losses.

The following are the most common reasons investors make claims against investment promoters. If you answer “yes” to any of the following questions, you may be the victim of fraud or other misconduct.

  1.  Did you suffer losses on investments that were represented to be safe or risk-free?
  2.  Did you find out after you invested that the company you purchased was experiencing financial difficulties?
  3.  Did your broker offer only sketchy, incomplete descriptions of the companies he was recommending for investment?
  4.  Did the salesman use high-pressure sales tactics to convince you to purchase?
  5.  Did you later learn that the brokerage company owned the stock that it sold to you?
  6.  Did your broker first contact you by telephone from an out-of-state office?
  7.  Did your investment professional lose money that was earmarked for retirement?
  8.  Was your money invested primarily in high-risk stocks of obscure companies that were unknown to you?
  9.  Were your investments over-concentrated in one security or one sector?
  10.  Did your broker increase your investment activity through margin borrowings?
  11.  Did your broker engage in frequent in and out trading, also known as account churning?
  12.  Did the broker make investments that were not authorized by you in advance?
  13.  Did your broker fail to liquidate an investment you wanted to sell?
  14.  Did you lose money because the broker failed to execute trades on a timely basis?
  15.  Do you have reason to believe the price you paid for a stock was excessive?
  16.  Did you consistently lose money on stocks recommended by your broker?
  17.  Was the advice given by the firm’s analysts in their research reports usually incorrect?

If you answered “yes” to any of these questions, you may be able to recover your investment losses through a lawsuit or arbitration. Read on to learn more about the most common types of securities claims.

Common Types of Securities Claims

Investment Fraud

Investment promoters and salesmen who make recommendations to customers must provide prospective investors with balanced, complete sales presentations that fairly present the major risk factors along with the positive aspects and potential rewards. Securities salesmen must disclose to the investor “all material information necessary to make the representations made not misleading.” Therefore, investors may recover for the non-disclosure of information, where disclosure is necessary to make the sales presentation balanced and complete. Misrepresentations and omissions in the sale of securities may give rise to claims for violation of federal and state securities statutes and claims arising under common law theories such as fraud, misrepresentation, and breach of fiduciary duty.

Unsuitable Investments

Under the rules of FINRA, a broker may not make an investment recommendation unless he has reasonable grounds to believe that his recommendation is suitable for the customer considering the customer’s other securities holdings, financial situation, and investment objectives. This is commonly referred to as the “Suitability Rule.” A securities broker is required to make reasonable efforts to obtain information about the customer to determine what investments to recommend. The suitability rule is the foundation of the broker-customer relationship. “Caveat Emptor” simply does not apply when brokers recommend securities.

Churning

Churning occurs when a securities broker engages in excessive trading in disregard of a customer’s investment objectives to generate excessive commissions. Proof of a churning claim requires evidence that: (1) the broker controlled trading in the account, (2) trading was excessive considering the customer’s investment objectives, and (3) the trading was done in reckless disregard of the customer’s best interests to generate excessive commissions. Signs of excessive trading include frequent short-term trading, repeated turnover of the portfolio and excessive commissions.

Unauthorized Trades

Unless the customer has given his broker discretionary trading authority, which typically is done in writing, a broker must obtain his customer’s advance permission before executing any purchase or sale of investments. A broker must always follow the customer’s instructions concerning the buying and selling of securities and must provide the customer with timely trade execution at the best available prices.

Pricing Violations

Federal and state laws prohibit market manipulation, excessive markups or markdowns of securities, and the quoting of fictitious prices. Pricing violations sometimes occur when small, “boiler room” brokerage firms attempt to make a killing by selling thinly-traded, over-the-counter securities at highly inflated prices.

Negligent Investment Advice

While an investment promoter or salesman cannot be sued simply because his or her enthusiasm for a stock turned out to have been misplaced, the broker must exercise reasonable diligence to investigate a security so that he can determine whether it is suitable for the customer. Claims for “bad investment advice” typically involve negligence, unsuitability or misrepresentation.

Disclaimer:  Please note that the information on this page is provided for general information purposes only and may not reflect current law in your jurisdiction. The information contained herein should not be considered as legal advice. You will not be considered a client of Whiteman Law Firm until we have signed an agreement for legal representation.

Learn more about our disability benefit practice

 

Your Disability Benefit Claim

Are you unable to work due to disability? Did your employer or insurance company deny or terminate your disability benefits claim? Have you paid expensive insurance premiums for years only to be told that you do not qualify for benefits? We have been retained as counsel in over 300 cases involving disability benefits claims and have represented clients in over 45 court cases.

We represent individuals who have claims for:

  1. Short-term and long-term disability benefits.
  2. Denial of benefits under individual or group disability insurance policies.

We can review the facts of your case on a confidential, no-cost basis, and advise you on your options for recovering disability benefits. Please contact us.

Claimants should be aware of the following:

1. Employee benefits are controlled by ERISA

Disputes involving employee benefits are governed by a federal law, called ERISA, which stands for the Employee Retirement Income Security Act of 1974. A law that deals with “employee retirement income security” sounds friendly, however, ERISA provides significant advantages for the employer or insurance company.

In an ERISA case, the claimant is not entitled to a jury trial. Usually, there is no trial at all. Typically, the court’s role is limited to reviewing the plan document and the claim file to determine whether the claims administrator abused its discretion. Under this limited standard of review, the claims administrator’s decision will be upheld if it is “reasonable.” The claims administrator does not have to give greater weight to the claimant’s treating physician and may decide to accept the evaluation of one of its own staff physicians, even if that doctor never examined the claimant. ERISA restricts the court’s review to documents that were available to the claims administrator at the time it issued its final decision. Evidence obtained alter the claimant has exhausted his or her administrative appeal rights cannot be considered by the court. Therefore, it is of paramount importance that the claimant develops fully the evidence in support of his claim and submits such evidence to the claims administrator during the claim process.

2. Non-ERISA disability cases are governed by state law

Holders of individual disability policies have significant advantages over those whose benefits are provided through an employee benefit plan. An individual disability policy is a contract with an insurance company. If the insurance company later denies the claim for benefits, the claim is governed by state law. The claimant has right to file a lawsuit in state or federal court, and the dispute will be resolved by a jury. The claimant has the right to bring witnesses to the trial to support the claim. In addition to the claim for breach of contract, the claimant might be able to raise additional claims if the insurer’s refusal to pay constitutes bad faith. Many states, including North Carolina, have state consumer protection statutes that allow recovery of treble damages and attorney’s fees. Punitive damages may be available if the insurance company’s conduct is bad enough.

3. There are time limits for acting

Private disability insurance is governed by the wording of the policy. If the insured pays the premiums, the policy remains in force and the insured may submit a new claim for benefits at any time.

When the claim involves an employee benefit plan, the plan documents and ERISA provide important time limits. The claimant may lose eligibility If he does not claim disability before the termination of employment. If the claimant does not appeal within 180 days, the claimant loses his right to claim benefits.

4. The claimant must exhaust administrative remedies

In an ERISA case, the claimant must proceed through the claim submission and appeal process before he Is allowed to file suit. The failure to exhaust administrative remedies before filing suit usually results in dismissal.

5. Claimants have important rights

Claims administrators are required to provide a detailed explanation of why the claim was denied and to advise claimants of their right to appeal. Claimants have the right to request that the claims administrator produce plan documents and the claim file. It is imperative that the claimant or his attorney obtain the claim file to evaluate the claim’s administrator’s evidence and to determine what additional evidence should be submitted.

6. Support from health care providers is essential

A successful claim requires strong documentary support from healthcare providers. It is usually necessary for the claimant’s doctors to work with the claimant or his attorney to carefully rebut the claims administrator’s arguments. The claimant’s medical records must support a finding of disability.

7. Understanding the definitions

Most policies contain two or three definitions of disability. These are known as “own occupation,” “any occupation” and “residual disability.” In addition, many employer-sponsored plans provide limited benefits for disabilities caused by mental illness or self-reported symptoms.

Generally, disability coverage offered by an employer will provide that a claimant will be considered disabled if he is unable to perform “the material and substantial duties of his occupation,” or sometimes “each and every material duty of his occupation.” The meaning of those phrases is sometimes not readily apparent. The term “occupation” is broader than “job.” Job duties that are not generally required to perform the occupation will be disregarded in assessing disability. Therefore, when the appeal involves the “own occupation” definition, the starting point should be a detailed job description and an assessment of whether the claimant is unable to perform each of the duties on a full-time basis.

Employee benefit plans usually provide that after two years the claimant will be considered disabled only if he is unable to perform “any occupation for which he is reasonably suited by reason of age, education or experience.” This is a harder definition to meet, as it requires proof that there is no gainful occupation that the claimant can perform.

Disclaimer:  Please note that the information on this page is provided for general information purposes only and may not reflect current law in your jurisdiction. The information contained herein should not be considered as legal advice. You will not be considered a client of Whiteman Law Firm until we have signed an agreement for legal representation.

  

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