Sotos Investor Protection Group

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Claims Against Investment Advisors & Dealers

When you entrust your savings to an investment advisor, dealer, or other financial professional, you are placing your financial future in their hands. This relationship is built on a foundation of trust and the expectation that they will act with professionalism, integrity, and in your best interest.

Unfortunately, that trust is sometimes broken. When investors suffer losses due to negligence, misconduct, or bad advice from a registered professional, the consequences can be just as damaging as outright fraud. At Sotos Class Actions, our Investor Protection Group is committed to holding financial professionals and their firms accountable and helping investors recover their losses.

The Professional Standard of Care

Unlike anonymous scammers, investment advisors and the firms they work for are regulated and legally required to meet a high standard of conduct. In Ontario, anyone selling securities or offering investment advice must generally be registered with the securities regulator. This registration comes with fundamental obligations to their clients, including the duty to make suitable investment recommendations, and to act fairly, honestly, and in good faith.

When these duties are breached and you suffer a financial loss, you have a right to seek compensation.

Common Types of Advisor and Dealer Misconduct

Investment loss claims against professionals are not about investments that simply perform poorly in a down market. They arise when your losses are the result of an advisor or firm recommending or purchasing investments that do not meet your financial needs. Advisors making those recommendations or purchases fail to meet their professional and legal obligations.

Common grounds for these claims include:

• Unsuitable Investments Your advisor has a duty to ensure that any investment they recommend is suitable for you based on your financial situation, investment objectives, risk tolerance, and other personal circumstances. Recommending overly risky, speculative, or complex products that do not align with your profile is a breach of this duty.
• Negligent or Fraudulent Misrepresentation This occurs when an advisor provides false or misleading information about an investment. This can include misrepresenting the level of risk, potential returns, fees, or other key facts that a reasonable investor would rely on when making a decision.
• Unauthorized Trading Your advisor or dealer cannot make trades in your account without your express permission, unless you have given them specific authority to do so in a discretionary account. Any trades made without your consent are considered unauthorized.
• Breach of Fiduciary Duty In some relationships, an advisor has a fiduciary duty to act in the best interests of their client. A breach of this duty can include putting their own interests (such as generating higher commissions) ahead of yours or failing to properly manage conflicts of interest.
• Excessive Trading or “Churning” This is when an advisor makes an excessive number of trades in a client’s account for the primary purpose of generating commissions for themselves, rather than for the benefit of the client.
• Failure to Supervise Investment firms have a duty to supervise their advisors to ensure they are complying with securities laws and industry rules. If a firm fails in this duty, it can be held liable for the losses caused by its employee’s misconduct.

Your Avenues for Recovery

If you have lost money due to the actions (or inaction) of a registered advisor or firm, there are several established paths to seek compensation.

• Civil Litigation: You always have the right to sue your advisor and their firm in civil court to recover your financial losses. This is often the most effective path for recovering significant damages. Where misconduct has affected a large group of investors, a class action can provide an efficient and powerful tool for justice.
• Ombudsman for Banking Services and Investments (OBSI): If you complain to your investment firm and are not satisfied with the firm’s response, you can take your complaint to OBSI. OBSI is a free and independent dispute resolution service that can investigate your case and recommend compensation of up to $350,000. These recommendations are non-binding and firms may ignore them if they choose to. Accepting a recommendation may extinguish any other legal rights you may have so you should consult a lawyer before doing so.

What to Do If You Suspect Advisor Misconduct

If you believe your investment losses are due to your advisor’s negligence or misconduct, it is vital to act quickly to protect your rights.

1. Seek Legal Advice Immediately. Securities law and civil litigation are subject to strict time limits, known as limitation periods. Contacting a lawyer experienced in securities litigation as soon as possible is the most important step you can take to understand your options and preserve your right to make a claim.
2. Gather All Your Documents. Collect all relevant paperwork, including account opening documents, account statements, trade confirmations, correspondence with your advisor, and any promotional materials you were given.
3. Document Your Conversations. Make notes of your conversations with your advisor, including dates, what was discussed, and what advice you were given.

Contact Us

The Investor Protection Group at Sotos Class Actions has the expertise to assess your situation and advise you on the best path forward. If you have suffered investment losses that you believe were caused by professional misconduct or negligence, please contact us for a confidential consultation.