Taken advantage of by Broker/advisor

[rugger]

I was given a sum of money by my grandparents that was supposed to be saved for when I bought a house, had kids etc. It was managed by their financial advisor. He knew of my grandfathers' VERY conservative ways. My grandfather expressed to his/my advisor of his desire to keep my account conservative. Well, needless to say the whole stock market launching occurred and I started dabbling in securities. Even though I had never done this before, my advisor allowed me to make the decisions. Plus, even though my grandfather didn't have any say, I still felt like I and his/my advisor was going behind his back, so, I told my grandparents they said to be careful and that they weren't entirely excited about the idea. My sister's name was on the account too, so I couldn't withdraw money without her/their knowledge/permission.(very controlling Italian family) While in the thick of it, I would receive little slips that I and my sister were supposed to sign acknowledging the trade. I asked my advisor what I should do, because I knew my sister wouldn't agree with the activity and he said, "don't worry about them." So the trades were made with none of these slips ever signed by me or my sister. Then, it seemed like everyday there was trade after trade, sometimes several within the same company, buying, selling and buying back. I had no idea what was going on and when I asked him, he said just let me handle it, everything will be ok. When the dust settled, I brought my grandparents gift of $70,000 up to $100k+ and then to NOTHING!!! Needless to say, I had a tough time bringing this to the attention of my grandparents. I was continually told by the advisor that they will come back and that's what I told my grandparents. They never did. I was never told about PE ratios, stop losses etc. Nor was I aware that he made money off of every transaction. I feel like I was completely taken advantage of. He couldn't even look me in myeyes at my grandmothers' funeral. Is there anything I can do???

 

[Michael Wechsler]

I was given a sum of money by my grandparents that was supposed to be saved for when I bought a house, had kids etc. It was managed by their financial advisor. He knew of my grandfathers' VERY conservative ways. My grandfather expressed to his/my advisor of his desire to keep my account conservative. Well, needless to say the whole stock market launching occurred and I started dabbling in securities. Even though I had never done this before, my advisor allowed me to make the decisions. Plus, even though my grandfather didn't have any say, I still felt like I and his/my advisor was going behind his back, so, I told my grandparents they said to be careful and that they weren't entirely excited about the idea. My sister's name was on the account too, so I couldn't withdraw money without her/their knowledge/permission.(very controlling Italian family) While in the thick of it, I would receive little slips that I and my sister were supposed to sign acknowledging the trade. I asked my advisor what I should do, because I knew my sister wouldn't agree with the activity and he said, "don't worry about them." So the trades were made with none of these slips ever signed by me or my sister. Then, it seemed like everyday there was trade after trade, sometimes several within the same company, buying, selling and buying back. I had no idea what was going on and when I asked him, he said just let me handle it, everything will be ok. When the dust settled, I brought my grandparents gift of $70,000 up to $100k+ and then to NOTHING!!! Needless to say, I had a tough time bringing this to the attention of my grandparents. I was continually told by the advisor that they will come back and that's what I told my grandparents. They never did. I was never told about PE ratios, stop losses etc. Nor was I aware that he made money off of every transaction. I feel like I was completely taken advantage of. He couldn't even look me in myeyes at my grandmothers' funeral. Is there anything I can do???

I'm really sorry to hear about what happened. I'm not sure what happened exactly but what you are describing -- if wrongful and repeated to excess -- could be an act known as "churning." Dishonest brokers may make excessive trades in order to charge commissions. I can't say that this happened and am not sure -- having a financial advisor doesn't necessarily mean that you need to understand PE Ratios amd frequently it's the case that people have them so they don't have to understand.

I've received several complaints from disgruntled people such as yourself. In most cases, unfortunately, those people were not defrauded and were mostly looking for someone to blame for the fact that they happened to lose money when they expected it to grow. It happens frequently with doctors and attorneys too, where people come to the healer to heal but life is such so that it doesn't always turn out successfully and there is no one at fault. This is NOT to say that this is the case with you. I'm hoping to assist you put your thoughts together clearly so that if there is a malfeasance that occurred, you and your case will receive deserved attention.

To begin, is the advisor a member of a reputable company? If so, there is usually a department that handles complaints such as yours. However, I'd advise you to think about the following questions that they will likely want answered.

Second, you should have reasonably good idea as to the actual number of trades that occurred and over the time period as opposed to a very rough number. If activity was minimal and then to an insane flurry, what did the advisor tell you to mollify you?

Third, you said that you started dabbling in securities -- so you should have had some education on the nature of the relationship. Is it fair to say that after all that time you never knew that your advisor made some money from the trades or generally how the relationship worked?

Fourth, don't you have any record of what happened to the money, including the commissions that were made off of each trade? Did you get monthly or quarterly statements?

These are just some basic questions you will want to answer. Otherwise an attempt to proceed forward might be met with resistance since your case is not stated in a clear fashion that would lead a reasonable person to conclude that you have been a victim of a fraud of some kind, rather just bad luck.

 

[rs58]

[Otherwise an attempt to proceed forward might be met with resistance since your case is not stated in a clear fashion that would lead a reasonable person to conclude that you have been a victim of a fraud of some kind, rather just bad luck]
I don't quite understand. Could you please explain, what did you mean by this? Is it obvious that he was frauded because, as you say, his letter was not written in a clear fashion? Is it because the way, or the fashion, in which he wrote the letter seems stresssed or confused? Then is it possible for a person to control the way another person relates to or precieves a letter by just the way, or fashion, that he writes?