Sample Securities Fraud Cases

Below are fictional examples demonstrating model securities fraud violations. They are based on actual cases we have handled in our 20 years in practice. Every securities case is different and your potential case cannot be properly assessed without consideration of the particular details involved; these are intended to provide an idea of successful securities fraud cases and their outcomes in arbitration.

Scenario 1: A couple that had recently retired to South Florida opens an account with just over a million dollars. These funds represent their life savings and nest egg upon which they rely to supplement their Social Security income. Their broker recommends investments which over the course of a couple of years cause the account to lose nearly $400,000 in value. A case is filed claiming that the investment advice given was unsuitable and at a mediation prior to the beginning of the final arbitration hearing, the case settles for $350,000.

Scenario 2: An 89 year old widow who suffers from dementia lives in a nursing home outside the state of Florida. Her broker is a young man who works for a nationally known brokerage firm in South Florida. Over the course of one year her account declines in value from over $500,000 to $15,000. Analysis of the account reveals that there are hundreds of unauthorized trades, primarily in technology stocks. During the course of the investigation, it is revealed that the broker has a substance abuse problem and was going through a divorce at the time of the unauthorized trading, making the unauthorized trades to generate commissions and increase his income. The case is resolved when the broker’s employing firm agrees to pay $650,000.

Scenario 3: Claimants have a brokerage account with a large nationally known brokerage firm. Over the course of 3 years their broker makes unauthorized trades and unauthorized transfers of securities and monies. To disguise the fraud the broker prepares fake monthly statements and directs the real statements from firm headquarters to an address he controls. He destroys the real statements. The case is resolved with the firm agreeing to pay nearly $2 million dollars.

Scenario 4: Claimant has a large concentration of stock in a single company (a company started by her grandfather). Ownership of this stock is the client’s only experience investing and this stock represents nearly 100% of the client’s total liquid net worth. Seeking advice, the client turns to a major broker dealer for financial advice and the idea of diversifying her large position in the one stock. The Broker dealer sets up the account and then fails to diversify the portfolio as promised. Shortly after opening the account, the stock price falls dramatically and the client loses a large percentage of her net worth. The case is settled for $950,000 at a mediation just prior to the beginning of arbitration.

Scenario 5: A group of over 80 investors retirement funds are invested in risky and unsuitable derivative investments known as collateralized mortgage obligations, “CMO’s.” Their common broker convinces them that these investments are suitable for them, however the investors lose most or all of their invested funds. A settlement is reached just prior to final hearing for nearly $6 million dollars.

For more information please visit