Analyzing cases in these difficult investment markets
By Drew Clayton, November 3, 2008
Over the past year, investment portfolios have sustained dramatic losses that have resulted from historic and cataclysmic developments in the world's economy. These extraordinary events have resulted from a variety of circumstances, including the collapse of the subprime mortgage market, the resulting credit crisis, and the demise or restructuring of some of the globe's largest and most notable investment houses and banks.
Our firm has significant experience in representing the interests of investors who have sustained losses as a result of wrongdoing by their stock brokers and investment advisors. In recent weeks, we have been contacted by many prospective clients who have lost significant amounts of money in the market. The purpose of this brief article is to explain the way in which we assess potential new clients' cases.
First and foremost, it is important to note that investment losses, standing alone, do not provide a legal basis for an aggrieved investor to recover their investment losses. In order for us to determine whether a potential client has a legitimate and viable legal claim, we must know the answer to at least five fundamental questions:
(1) What was the investors' investment objective(s)? For example, was the investors' objective income, growth, preservation of capital, speculation, or some combination of those?
(2) Did the broker or investment advisor recommend the investments in the account(s) at issue?
(3) If so, were those investment recommendations consistent with the investors' investment objective(s)?
(4) Could the investor afford to take the potential risk posed by those investment recommendations?
(5) And, if there were "unsuitable" investment recommendations, how much money has the investor lost as a result?
In order to get the answer to these questions, we need to see any account agreements and account opening documents for the brokerage account(s) at issue, as well as copies of all monthly statements covering a period of time that may span several years. We also need to review other brokerage accounts that the prospective client has had, as well as copies of the investors' tax returns for the past several years. In addition, we need to see any correspondence between a prospective client and the broker, brokerage firm, and/or any securities regulators. We may well need to see other documents that relate to the potential claim at issue, such as prospectuses and research reports, among others.
Of course, we will interview you and other available witnesses in detail. We will not prosecute any case unless we believe, based on a comprehensive investigation, that the case is meritorious and that the costs of engaging in a formal legal proceeding are justified by the potentially recoverable damages. In that regard it is very important to bear in mind that even if an investor's claim has legal merit (for example, because the investments at issue were unsuitable), the losses resulting from those investments may not be substantially worse than they would have been if the portfolio had been properly invested. In a "normal" investment climate, this type of concern would not be as significant as it is in these extraordinary times. Consequently, our analysis will also examine how an investors' portfolio would have done over the relevant time period had it been suitably invested.
If you retain our services, the investigation we will undertake on your behalf, outlined very briefly above, will take several weeks of time. Please bear with us as we seek critical answers to the questions above in order to provide you with competent legal advice. Thank you for considering our services.
The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send free written information about our qualifications and experience.
The Clayton Law Firm, P. A.
1 North Tuttle Avenue
Sarasota Florida 34237
phone: 941.951.0707
fax: 941.951.7702
© 2006-2008 The Clayton Law
Firm, P. A.. All rights reserved.
