For many people, financial investments help them prepare for the future. Frequently, investments help people build their resources for when they retire. They have to walk a fine line between a strategy aggressive enough to provide appropriate returns and safe enough to preserve the resources they already have.
Most investors cannot devote the time and energy necessary to learn about every prospective investment opportunity. They hire professionals to manage their resources and guide their financial decisions. Unfortunately, sometimes investment professionals allow a conflict of interest to compromise the advice they provide their clients.
In such scenarios, frustrated investors may have the right to take legal action after suffering significant losses.
What constitutes a conflict of interest?
Sometimes, investment professionals have already heavily bought into a particular stock or business. They might be in a position to liquidate their own holdings at a profit by convincing their clients to invest in the same opportunity. Other times, someone they know might run or work for the company in which they encourage others to invest.
If they or someone close to them stands to profit professionally or financially from the investments made by others, that might mean that they have a concerning conflict of interest. In scenarios where frustrated clients who have lost money on bad investments can show that their investment professional made money or otherwise benefited from the transaction that harmed them, they may be able to take legal action.
Even if direct profit isn’t verifiable, proving that they have a pre-existing connection that muddied the waters could make litigation an option in some cases. Holding investment professionals accountable for misconduct and breaches of fiduciary duty can compensate those harmed by bad investment advice.