Investment disputes involve disagreements over financial investments such as stocks, bonds, commodities, trusts, and corporate assets. Since most investments are secured through the use of contracts, many investment disputes arise over a breach of contract terms. For example, there may be disagreements in connection with the price of an investment.
The laws governing investment practices may vary according to state, and according to the type of investment involved. In general, investment disputes are handled in civil courts of law, though some investment violations may involve criminal matters as well.
What are Some Common Types of Investment Disputes?
Investments disputes can be classified into two main categories: Disputes that are directly related to the investment, and disputes between investors and their agents (such as a broker or dealer).
Some investment disputes that relate directly to the investment may involve such issues as:
- Issuance of stock: Some stockholders may have complaints about the way that company stocks are distributed. Also, there may be disputes involving terms like pricing, delivery, etc.
- Accessing funds: Disputes may arise over the ability to access funds. For example, with trust fund accounts, the beneficiary may only be able to access funds to be used for a particular purpose.
- Disclosure of information: Investments should be made according to a complete and fair disclosure of information to the investor. If the investment information is not fully disclosed, it could lead to instances of fraud or misrepresentation
- Foreign investment disputes: Foreign investments can become complicated due to an interaction of domestic and international laws
Investment disputes that involve investors and their agents can include:
- Breach of fiduciary duty: If an investor appoints an agent to handle their investment portfolio, the agent has a duty to invest the funds in a prudent and reasonable manner. A breach of such duties can lead to liability for the agent
- Malpractice: An agent may also become liable for malpractice, for instance if they grossly mismanage funds, or if they willfully access the investor’s money for their own use.
- Unauthorized disclosure of personal information: If a broker or dealer discloses an investor’s personal agent, it may also lead to legal liability
Thus, investment disputes can take a number of different forms, and can involve a whole host of different legal issues.
How are Investment Disputes Resolved?
In most cases, a civil lawsuit can be filed in connection with the investment dispute. This usually involves the issuing of a monetary damages award to reimburse the plaintiff for their losses. Punitive damages usually aren’t allowed except in cases involving gross recklessness or willful violations.
Many investment disputes are resolved through alternative dispute resolution methods such as arbitration. In arbitration, a neutral third party is appointed to help the parties reach a conclusion, resulting in a decision that is binding on both parties. Many investment agreements involve the signing of an arbitration clause, which requires the parties to forgo their right to litigation in the event of a dispute.
Should I Hire a Lawyer for Assistance With Investment Disputes?
Investment disputes can often be complex and will usually require the assistance of a lawyer. If you are involved in an investment dispute, you may wish to contact an experienced business lawyer in your area. Your attorney can help determine your legal course of action, and can provide assistance in court if you need to file a lawsuit.