Investment Loss Q&A with Attorney Mark C. Santi

This is a general investment loss Q&A which aims to address common questions of investment loss victims.

Why do so few investors file claims to recover their investment losses?

Many financial professionals are qualified, skilled, and have their client’s best interests in mind. However, the financial services industry is massive and some financial professionals lack the requisite expertise or they involve their clients in inappropriate investments or engage in outright fraud. Nevertheless, a relatively small number of claims are filed by investors. For example, in 2012 only 4,299 (See footnote 1) arbitrations were filed with the Financial Industry Regulatory Authority (FINRA) which regulates 630,345 (See footnote 2) brokers and nearly all disputes involving brokers. Furthermore, only a portion of the 4,229 claims involve investors rather than industry disputes.

I believe that many investors fail to invoke their legal rights for one or more of the following reasons:

  1. they are embarrassed that they misplaced their trust in the wrong financial professional;
  2. they believe the loss is their fault;
  3. they believe the loss was an inherent risk of investing when, in fact, the investment was unsuitable or the account was churned;
  4. they do not understand how or why they lost money due to the complexity of the products they were invested in; and,
  5. they are not aware of the loss because they do not closely following their investments, they cannot understand their statements, or the losses have been concealed.

You owe it to yourself (and your family) to fully research whether your loss is recoverable. An experienced securities attorney will likely evaluate your case for free, and your meeting with them will be confidential under the attorney’s ethical guidelines. If the attorney decides to take your case, it will likely be handled on contingency with fees paid only if you prevail.

I believe that I was placed in an inappropriate investment. Who might be responsible for my loss?

The common players involved in investment losses include investment advisors, stock brokers, insurance agents, friends, family, or acquaintances. Investment advisors (sometimes referred to as financial planners) and their firms generally charge you a fee in exchange for advice about your investments. They are governed by the Investment Advisors Act of 1940 and state law. Stock brokers (often called registered representatives or associated persons) work for brokerages (broker-dealers) and typically charge a commission to execute investment trades. Some firms are investment advisors and broker dealers. They are known as dual registrants.

Who regulates my financial professional and the firm they work for?

Generally, your investment advisor is regulated by the securities regulator in your state, unless they have assets under management of $100 million or more in which case they are regulated by the Securities and Exchange Commission (SEC). Your broker-dealer is regulated by the Financial Industry Regulatory Authority (FINRA). In addition to the foregoing, there are Federal and state (“blue sky”) laws that govern your financial professional.

How do I know if my financial professional is an investment advisor or broker-dealer?

Information about your broker/brokerage firm and investment advisor/investment advisor firm can be found through FINRA’s BrokerCheck service found here:

Information about investment advisor firms can be found through the SEC’s Investment Adviser Public Disclosure (IAPD) service found here:

Information about your individual investment adviser is available from your state

Information on your state regulator can be found here:

Can I file a complaint against my investment professional?

Yes. You can file a complaint:

  1. directly with the brokerage or investment advisory firm;
  2. with FINRA here:; and,
  3. with the SEC here:

You can also file a complaint with your state regulator. See my article on how to contact your state regulator here.

Please consider that your complaint will be likely accessible to your adversary and used against you should your dispute proceed to litigation or arbitration. You may wish to have an experienced securities attorney review your complaint before it is submitted.