What Constitutes Financial Malpractice?
In the true legal sense of the word, malpractice is defined as illegal, improper, or negligent behavior on the part of any professional. The specifics of malpractice vary greatly depending on the situation and the professional involved. Even though most people associate the word malpractice with the medical field, malpractice cases often involve members of the legal and financial sectors. In fact, with more people seeking financial advice than ever before, financial malpractice is becoming a huge concern.
Financial Malpractice
Every service profession, including the financial profession, has a standard of care they are required to meet. When it comes to accountants, financial advisors, and stock brokers, this standard of care is tied directly to their fiduciary responsibility to their client. This means that they are to use the power entrusted to them in a manner that will most benefit their client.
Malpractice may occur when a financial professional fails to execute transactions properly, make suitable financial recommendations, or trades as ordered, or commits fraud. Charging excessive fees may also be considered malpractice in some cases.
Signs You May be a Victim
When a medical malpractice is commited by a professional, the results are often immediately obvious. However, financial malpractice is often less evident. If you have placed your trust in a financial professional, and your account is missing money, a financial malpractice claim is pretty clear-cut However, if an investor is negligent, it may be more difficult to determine.
Typical warning signs of fiduciary irresponsibility may include investments that don’t fit the investor. An example of this type of negligence would be placing an elderly person’s retirement savings into a speculative start-up company’s stock. A second form of negligence is when a broker or advisor invests, or suggests investing, too much of a client’s money into one stock or other possibly risky investment. A good portfolio needs to be diversified so that one bad investment can’t cause significant harm to the portfolio.
Another red flag is when you have purchased an investment instrument and you find out it is difficult to sell. These types of investments are often referred to as illiquid investments. Unfortunately, they are bad for investors but pay high commissions to financial advisors.
Reach Out to Us
If you believe that you or someone close to you has been the victim of financial malpractice, give us a call at 1-877-365-0040 and speak with one of our highly-experienced injury lawyers in Chicago, Illinois. At Shea Law Group, we have extensive experience in these types of claims, and we are here to help you.
