Legal Question in Investment Law in Massachusetts

My 78 year old mother (in California) was being manipulated by her investment broker to invest in extremely risky investments. The broker actually gave my mother a prepared document to sign which implied she could financially withstand the risk. All along, my mother clearly did not understand her investments and had been relying on the broker for his professional advice.

The investment went bankrupt and she lost 2/3 of her portfolio. The broker then proceeded to have my mother sign up for a bankruptcy settlement which purported to waive her rights to sue. Currently, my mother's attorney is saying she cannot sue her broker for malpractice since she signed this "waiver."

It does not seem as if she received anything for signing over her right to sue her broker. I understand she received value when she signed over her right not to sue individually for the bankruptcy, but she never received anything for giving up her right to sue her broker.

Is it legal that she would be required to give up both without just compensation? Please note, her broker told her that she should sign the waiver in order to get her money back. It seems as if he had an unjust interest in convincing her to give up her right to sue him. Please let me know if there is anything that can be done. Thanks.

Asked on 11/16/11, 6:25 am

1 Answer from Attorneys

Nicholas J. Guiliano Securities Arbitration Investment Fraud Lawyers

While it would be inappropriate to speculate, it does appear that your 78 year old mother may have a very viable suitability, investment fraud claim, irrespective of the bankruptcy proceeding because her claims are againt the representative's employer as a control person and for vicarious liabilility under the federal securities laws. These claims would not have been discharged in the broker's bankruptcy (another sad fact that they can manage their own finances but want to manage yours), and moreover, claims arising under securities fraud are not dischargeable in bankruptcy.

What really matter is whether this person was registered with a brokerage firm as opposed to some errant investment advisor with no insurance selling a ponzi scheme.

In any event, this area of the law is well recognized. I am sure you will get 100 responses to your post. Coincidentally, that is all we do. Nationally, we have handled more than 1000 of these cases, and work on a contigent fee. Please visit our website to call me directly, we would be delighted to evaluate your mother's claim. Nicholas J. Guiliano.

Read more
Answered on 11/16/11, 7:51 am

Related Questions & Answers

More Investment Law questions and answers in Massachusetts