California Failure to Supervise Lawyer

California Failure to Supervise Attorney

When you seek to make financial investments, you want to make sure your investment is well taken care of and supervised by the right people. If your investment adviser or broker was improperly supervised or not supervised at all, you could end up losing money or getting taken advantage of financially or legally. The last thing you want is for your finances to be involved in a scandal. Contact a California failure to supervise lawyer for more assistance.

The legal team at Rosenberger + Kawabata is dedicated to providing our clients with the tools they need to overcome investment fraud and uncover the honest truth about how they have been taken advantage of, if at all. By adhering to FINRA Rule 3010, all brokerage firms are legally required to supervise their registered employees. If certain employees are not properly supervised, the brokerage firm that employs them may be held liable for their customers’ losses.

Failure to Supervise

FINRA Rule 3010 requires brokerage firms to supervise all activities of their registered employees, meaning that the firms themselves owe a duty to the investors who trust the firm with their investments.

When an employee violates the law by engaging in, for example, breach of fiduciary duty, theft, unauthorized trading, selling away, etc., and the firm fails to reasonably supervise the employee in a manner that would have prevented the illegal behavior, the firm is liable to its investors for their losses.

Reasonable supervision requires the examination and monitoring of broker-dealers and investment advisers and their records to detect and prevent wrongdoing. If a firm has failed to take proper measures to follow up on red-flag practices or failed to put in place and enforce policies to detect red-flag practices, it can be held to account for losses it should have prevented in securities litigation or FINRA arbitration.

Elements of a Failure to Supervise Claim

Under certain federal financial rules and regulations, a brokerage firm owes an expected duty of care to all of its clients and customers when it comes to properly investing their finances, as well as monitoring and supervising their employees. If your investment was mishandled and involved in fraudulent or illegal activity, you may be able to file a failure to supervise claim, provided your claim has certain necessary elements associated with the case:

• Securities Violation: To move forward with your failure to supervise the claim, you first have to prove the existence of an underlying securities violation present in your case. This securities violation is going to be specific to each individual case since no two financial fraud cases are the same. It could take the form of a violation of state or federal investment laws, securities fraud, or even a violation of FINRA rules.
• Brokerage Firm Association: For obvious reasons, the person who was improperly supervised and committed investment fraud with your money has to be formally associated with the brokerage firm in question in order to hold them liable for damages. This includes former employees, who are considered members of the firm as per FINRA rules. Determining a connection may be fairly simple, especially if it’s public knowledge.
• Supervisory Jurisdiction: In accordance with FINRA rules, broker-dealers are required to review the actions of every broker in their firm. Broker-dealers have to supervise the actions of their employees to ensure instances of fraud do not happen. They supervise by periodically examining customer accounts for evidence of any wrongdoing or irregularities. They also supervise outside businesses, such as registered advisory firms.

For a claim to move forward, you must be able to prove that the brokerage firm that employed the individual who engaged in certain criminal or ethically questionable behavior had supervisory jurisdiction over that employee. They then failed to exercise that jurisdiction and may be held liable for additional losses.

The Importance of Proper Supervision

When a member of a brokerage firm engages in improper behavior, particularly with clients’ money, it reflects poorly on the entire brokerage firm. Under FINRA rules, the firm itself may be held liable for one employee’s poor choices due to the simple fact that they should’ve noticed. There are countless procedures in place to monitor employee actions, client accounts, and red flags.

FAQs About Failure to Supervise in California

What Are the Elements of a Failure to Supervise a Claim?

Every failure to supervise a claim must have certain elements to be properly considered, which include:

• There was a present underlying securities violation.
• The brokerage firm that employed the offender had a duty to supervise.
• The firm failed to reasonably supervise the offender.
• That failure to supervise led directly to the investor’s losses.

If you can prove these elements, you may have a strong case on your hands and should consider moving forward with a lawyer’s help.

What Is the Statute of Limitations for Negligent Supervision in California?

The statute of limitations for negligent supervision in California is two years. The state will give you two years from the date you first noticed the financial losses to establish grounds for a claim, build up a strong enough case, gather evidence that supports your claim, consult with an experienced investment fraud lawyer, and file a claim for compensatory damages. If you can’t build your case after two years, it will most likely be thrown out.

What Is Negligent Supervision of Employees?

Negligent supervision of employees occurs when a supervisor fails to properly oversee the employees under their care and ensure they do not cause harm to others. In the financial world, negligent supervision can lead to one employee of a brokerage firm taking financial advantage of various clients and improperly investing their money. A failure to supervise in California can lead to the brokerage firm taking the fall for their employee’s misconduct.

Do I Need a Lawyer for a Failure to Supervise a Case?

While you don’t technically need a lawyer to help with your case, it is highly recommended that you hire one anyway. There is a good chance that you may not have the technical knowledge to fully understand the most effective way to approach this case, and that’s understandable. Having someone in your corner who understands the complexities of investment law can only help you in the long run.

Contact Us Today

Getting taken advantage of financially can be devastating, especially if the misconduct in question costs you a substantial amount. You may want justice quickly, and that’s understandable. It can be difficult to know exactly what your first steps are toward building a case for failure to supervise. That’s where an experienced investment fraud lawyer comes into play. We can help you figure out your next steps and start building a case for you.

If you think that your investment adviser was not properly supervised by their employer, contact Rosenberger + Kawabata. We can work with you to gather evidence of negligent supervision, connect your investment adviser to their firm, and hold the right people accountable. Contact us to speak to a valued team member about the most effective way we can help you.