Investors may have encountered securities advisers and stockbrokers who boasted of their expertise or special understanding of the market. Although certain market fluctuations may be cyclical, investment strategy is often equal parts art and science. Yet the discretionary part of the equation should not become too subjective, lest financial professionals breach their fiduciary duty to shareholders or run afoul of the laws regulated by the U.S. Securities and Exchange Commission.

In the ongoing Bernard Madoff lawsuit, a witness is expected to testify that the former investment advisor overstated his securities deals as early as the 1970s, perhaps laying the foundation for the 1990s Ponzi scheme that led to Madoff’s arrest. If true — that the pattern of deception began over 40 years ago — then Madoff’s inner circle may have played more of a role in the Ponzi scheme than previously believed. 

The Madoff scheme is infamous because of its sheer magnitude as one of the largest financial frauds in the country’s history. Yet it also represents the current trend in securities fraud litigation. Traditionally, a securities fraud lawsuit may have alleged than an individual broker or advisor deceived or cheated investors.

However, stockbrokers are financial professionals, not detectives. When a brokerage firm withholds information from its employees, brokers themselves may be the victims of misrepresentations or omissions. In such event, those defrauded professionals may themselves be in need of a securities attorney, as their careers may have been adversely affected as a result of their employing brokerage firm’s misconduct. They may also be willing to cooperate with investors who suffered financial losses because of the fraud.

The landscape of securities litigation is changing, and an attorney that specializes in this area of law may have strategies for obtaining broker cooperation in bringing lawsuits against brokerage firms. 

Source:, “Madoff’s right-hand man ready to take the stand,” Tom Hays, Dec. 2, 2013

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