Legal Question in Investment Law in Michigan

Can I hold my asset manager liable for loss?

Asset manager(AM)recommended margin for improving account growth. Recommended Ford because of dividend and $19 targeted price. Have used strategy on 32,177 shares with margin of $124,000.

Expectated AM to have limited losses, especially given the fact that account was margined, and to protect against total elimination of the account's value.

AM fee is 1.5% of the account value.

I was alerted to the problem with a ''house call'' from broker because the stock price was in the $11 range. At that point, my account value had decreased $150,000 and $55,000 of stock had to be sold at $11.30 to meet requirements.

I asked AM why he didn't protect the down side. He said he didn't utilize stop losses because they typically force the stock down to that point and it gets sold out at that value. Also indicated his is a ''investor'' style, not a ''trader.''

I feel AM was not focused on account detail as his attention was diverted to process of changing broker/dealer and extensive time away from office while he was expanding his business into real estate. AM does not feel that he has done anything wrong.

Do I have a basis for going after losses? How solid is case ? What about filing a complaint to NASD and/or SEC?


Asked on 4/06/05, 1:23 pm

1 Answer from Attorneys
Joel Kaufman Law Offices of Joel H. Kaufman

Re: Can I hold my asset manager liable for loss?

you may have a case. the asset manager has a duty to diversify your account and to limit the risk. for more information,please contact me at 248-851-3171.

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Answered on 4/20/05, 12:06 pm


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