Elgin, IL asked in Stockbroker Fraud for Illinois

Q: I recently learned my stockbroker has been sued in the past and he never disclosed this. When I confronted him, he told

me he was only required to disclose if I directly asked him. Is this true?

Related Topics:
1 Lawyer Answer
Alex Schmidt
Alex Schmidt
  • Criminal Law Lawyer
  • Cranford, NJ

A: Whether a financial advisor registered with FINRA must report to his broker dealer or disclose on his brokercheck when they have” been sued” depends on 2 things:

1. The total settlement amount and whether the registered person was involved in an alleged sales practice violation

2. What the nature of your stockbrokers lawsuit consisted of?

Much will depend on what the broker was being sued for. Whether named in the caption of the lawsuit or not, the registered person must report an arbitration or civil lawsuit on his or her Form U4 if the action pertained to violation of FINRA rules or “sales practice violations”. The Form U4 is the Uniform Application for Securities Industry Registration and has 15 different sections including information about brokers or registered representatives including disclosures about certain past lawsuits. Many other disclosures must be made that can be associated with lawsuits or being sued such as any judgment liens or filing for bankruptcy. In short more information will be needed concerning the nature of your financial advisors lawsuit in order to determine whether a disclosure should have been made.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.