Confidential Settlement Reached In Case Involving Improper Margin Trading

Recently, Heimanson & Wolf obtained a sizeable settlement against a major securities brokerage firm. In that FINRA arbitration, we represented the investor who was a young woman suffering from a terminal medical condition. Our client provided her savings to her broker, telling him that the funds would be needed to pay for her medical care down the road. Our client trusted her broker implicitly.

What our client did not realize at the time was that the broker had placed her on margin. Margin trading is when you borrow money from your brokerage firm to increase the amount of securities you can purchase. It is nothing more than a type of debt financing. This substantially increased the amount of risk that the broker was taking for our client. The broker argued that the investor knew she was trading on margin and signed off on the margin trading. Yet, she was an unsophisticated investor, and she blindly trusted the broker and his recommendations. Ultimately, we obtained a sizeable recovery for our client in settlement that contained a confidentiality provision.