PHAM & CLOVES, PLLC

Last week, the Attorney General’s office announced that it is filing charges against Bernard Madoff for security fraud in a ponzi scheme.  Like many investment firms that have gone bad, Mr. Madoff may have had good intention when he started the investment portfolio that have devastated many individuals and investment firms, and shocked the general public.  For whatever reasons, whether it is profit, greed, the fear of failure, Mr. Madoff and other investment managers and firms have defrauded investors, and will continue to do so unless the SEC enforces federal regulations set forth to prevent such activities.

The activities referred above is not limited to ponzi schemes but also applies to regulations that intended to deter insider-trading, anti-trust law and regulations, and breach of fiduciary duties as brokers and agents. Over the past 8 years, the Bush Administration has not been enforcing regulations intended to incriminate and deter anti-trust trading and insider-trading.  The evidence of such trading can be seen on a daily basis within the past few months as the recession continues.  Every day, ordinary investors see large movements pre and after-market trading, or at the final hour or minutes of the trading day where large amount of purchase and buy-offs, moving the market against the fundamentals of economic, creating instability and volatility in the market.  The fact is, traders should not use inside information to trade for the benefits of their clients or for themselves.  The fact is, investment firms are not supposed to talk and concluded in buying or selling funds, thereby moving the market significantly to one side or another, only do the reverse within the same trading day or the next, and create unpredictability and volatility.  Sadly, the fact is that all these things happen on a daily basis.

So, what is an ordinary investor like yourself to do if you feel that your broker is acting in ways that may have breached his or her fiduciary duty?  Well, the law is still on your side but that you must have the gumption and the willingness to prosecute to protect your rights.  The duty of an agent and broker toward the fiduciary goes far beyond illegal practices described above.  Although there are always inherent risks in investing in the stock market, mutual funds, ETFs, and option trading, the broker has the duty of care, which requires prudent investment and avoid illegal activities and high risks investments.  The duty of care also extends to the duty of loyalty and not to deal for personal gains in term of brokerage fees.  The fiduciary duties also extend to the duty to keep the fiduciaries informed of the risk and the nature on the broker’s investments and actions.

Should you have any concern regarding your broker’s or agent’s investment, and have suffered losses as the result of such investment, please feel free to contact our Houston Security Litigation Attorneys, Northwest Houston Security Fraud Lawyers, and our Houston Commercial Litigation Lawyers at 832-484-9015 or through our online contact form.