No minimum or maximum loss amount exists as a dollar amount to tell you when you need to hire a stock loss lawyer. You can use percentages as a guide.
Logically, some companies perform better than others. Events can unfold at a firm that no stockbroker could have expected. These events could turn a once-promising stock into a failed one.
Other times, though, a stock loses money, and your broker should have contacted you to let you know about the potential loss. They should have offered the option of selling, so you could reduce the amount you lost.
When did your broker contact you?
Knowing when to call an attorney and what constitutes a relatively normal stock market fluctuation can help you recover from unusually large losses. Losing 10 percent to 20 percent on a stock trade proves relatively normal from time to time. You won’t always pick a winning stock. Since a loss of 10 to 20 percent requires just an 11 to 25 percent return to recover, you can weather it pretty easily.
The other thing about a 10 to 20 percent loss is that it can occur rapidly. Our broker should have contacted you as soon as the stock dip looked serious. That’s how you kept the loss so small, unless that 10 to 20 percent represented the total drop of the stock price.
Conversely, if your stock loses 50 percent, you will need to earn a 100 percent return just to break even. At this point, you should closely examine how you accrued that loss. Did the stock plummet quickly, suddenly dropping in value? Or did it dip a little, at which point your broker alerted you to the problem? You decided to hold the stock and it created a larger loss when it dropped. If either of these happened, you had bad luck but a good broker. You still don’t need to phone an attorney.
When a stock loses 10 to 20 percent but you do not hear from your broker, you might need to call an attorney. Perhaps they phoned you at a 25 percent loss though. As long as they phone or text you quickly – the day the stock fell, preferably within the hour it started falling – you still don’t need a lawyer.
Speed of Contact, Not Loss Amount Matters Most
There’s the hitch. It isn’t a matter of the amount of the loss but how quickly once any stock begins dipping or plummets, your broker phones or texts you. This isn’t needed as much if you have a stop-loss order in place, but if you don’t, your broker should actively protect your money by apprising you of the situation.
If you lost 30 percent or more but did not receive a phone call, you need to call a stock loss lawyer. That’s because you need an attorney to investigate whether your stock broker acted in your best interests or if he or she mishandled your trades.
A court settlement can help you recover some or all of the money lost. Few portfolios can handle a large loss of 50 to 75 percent or more. You’re talking about a massive amount of return necessary just to break even.
While this may still sound rather arbitrary, it isn’t. The industry receives oversight from the Financial Industry Regulatory Authority (FINRA). It sets rules providing specific actions and activities that brokerages and brokers must do and processes and procedures that they must follow. When apprised of potentially inappropriate activity by a business or individual under its purview, the FINRA Department of Enforcement investigates.
For example, Aegis Capital Corp. failed in its compliance requirements and allowed excessive trading. During a four-year period from 2014 to 2018, Aegis failed to comply with regulations. During that period plus 2019, the company failed to provide “appropriate supervisory measures,” and this resulted in “unsuitable leveraged, inverse, and inverse-leveraged exchange-traded funds (non-traditional ETFs)” on investor accounts. In November 2021, Aegis Capital Corp. submitted a letter to FINRA detailing how it would resolve its compliance shortfalls that resulted in FINRA censure, a nearly $1 million fine, and a restitution order of nearly $1.7 million.
Cases like the FINRA crackdown on Aegis occur because someone like you steps forward to contact an attorney to report a potential compliance breach or misconduct.
Improving Your Chances in Court
The stock trader and stockbroker relationship requires trust. When your broker doesn’t do his or her job, you may have a legal case. The settlement from this legal case could help you recover some of the money you lost.
Hiring an experienced securities arbitration attorney can make all the difference in how your court case turns out. You need an attorney who understands the securities arbitration process and the inner workings of the securities industry. An attorney who specializes in securities arbitration can conduct an appropriate investigation into the trade and the stockbroker’s reaction and actions following the stock’s poor performance and evaluate a claim against a brokerage firm.
This investigation includes following the paper trail to obtain documents that trace the broker’s activity and timing. These documents provide critical information in any securities case.
When do you hire a stock loss lawyer?
If you experienced a deeply felt loss due to the stock market plummeting, then the time to hire one is now. Don’t wait to call a lawyer because you might miss the cutoff to file your lawsuit. Every crime, whether criminal or civil, has a statute of limitations except murder. Don’t miss the date by which you need to file to recover your lost money. Contact Wolper Law Firm today to get started on your stock loss legal case.