You constantly hear about people who fall victims to scams and fraud. Immediately your mind says, “Nah” that won’t happen to me,” then one day, you wake up and realize that all your life savings are banished. You think that if only you had checked your financial advisor license in brokercheck.com (free of charge), you would have found out that your “Finacial Advisor” was not even licensed in the first place.
Atty David Meyer, the managing principal at Meyer Wilson, one of the nations leading firms representing investment fraud victims, joins us for a conversation on how one conversation at the copier machine over 20 years ago led him to win a record-breaking jury verdict protecting 150 investment fraud victims.
Since then, David has been battling fraudulent financial advisors for more than two decades, and in this conversation, he shares some of the best advice he has for other lawyers who want to protect themselves and their clients.
Whether you are a lawyer looking for a renowned lawyer to help your clients with a potential financial fraud event to your client or you were too tempted to join Robinhood during the pandemic and invest all of your life savings in GameStop stock, this conversation is for you.
Resources mentioned in our episode:
Send us your questions at email@example.com
Enjoy the show? Please don’t forget to subscribe, tell your coworkers, and leave us a review!
Liel: [00:00:00] According to front line professors from the University of Chicago and the University of Minnesota say that up to 44 percent of financial advisers found guilty of misconduct are back to work within a year. I’m Liel Levy, co-founder of Nanato Media, and this is In Camera, podcast, where we have already bookmarked BrokerCheck.com. Welcome to our focus, private legal marketing conversations, Grace, welcome back. How are you today?
Grace: [00:00:57] How are you? I’m good, Liel.
Liel: [00:00:59] I’m doing great. Thank you so much for asking Grace in. So today, Grace, we’re back here for a very interesting conversation, a very unique one, a topic that we haven’t really talked a lot here in the podcast before. So I’m really excited about it. And without further ado, I’ll let you go ahead and do your amazing intro.
Grace: [00:01:17] Fantastic. So we do have a very cool guest today. And like Liel said, it’s very unusual topic. So I’m just going to go right into it. Today, we are joined by attorney David Meyer for a conversation on investment fraud. David is the managing principal of Meyer Wilson, a national law firm he founded to represent investment fraud victims in their fight against deceptive brokers. Meyer Wilson is one of the nation’s leading investment fraud firms, recovering millions of dollars for clients throughout the last 20 years. David is currently the president of two bar associations, the Public Investors Advocate Bar Association and the Ohio Association for Justice. Most recently, David published the bestselling book The Investor Protector, where he shares how he has helped his clients regain their savings and peace of mind and what you can do to protect yourself. David, welcome to In Camera podcast.
Liel: [00:02:11] David, welcome to In Camera podcast. Congratulations on your new book, The Investor Protector, and for becoming a best seller. How does it feel?
David: [00:02:19] Oh, it’s great. It happened a lot quicker than I’d even hoped, but I was happy to learn that and really excited about the book and the attention it’s getting. And and we can get into a little bit later. But I think I’ve already helped at least one person who read the book even before it came out and made some big decisions based on what they read the book. So it’s very rewarding.
Liel: [00:02:39] Wow, that’s amazing. That’s a really, really fast impact book. So let’s start where is this podcast finding you?
David: [00:02:46] Well, actually, right now I’m in Columbus, Ohio. We have several offices around the country. We represent investors nationwide. But right now, I’m sitting in our offices in Columbus, Ohio.
Liel: [00:02:56] Awesome. Well, thank you very much for joining us. David, in you’ve just shared with us you have offices all over the nation. Tell us a little bit more. Let’s start from backtrack here a little bit. And let’s hear a little bit about your journey in the legal world. Where did it started? How do you got to where you are right now?
David: [00:03:13] Sure. I have what I think is probably a nontraditional track into the practice of law, although my father is a plaintiffs trial lawyer, he actually just retired about last year and he’s 89 years old. So he was a plaintiffs trial lawyer for sixty five years in the state of West Virginia, which is where I grew up. But I never really thought as a little kid that I’d be a lawyer, although I did often accompany my dad to the office and to see trials as I was growing up to see the good work he did on behalf of people that really needed the help. But in college, I was a whitewater rafting guide. I was also a juggler. I spent some time juggling on the boardwalk for some extra cash. So eventually I ended up going to law school after college and I got a Masters in tax. I thought I was going be a tax lawyer, which is not as, it’s not very fun and it probably doesn’t sound very fun.
Liel: [00:04:10] For tax lawyers. Yeah. I guess a conversation with legal PR firm. Right. And we were talking about our own little project that we have for which they’re helping us. And they say, oh, this is amazing. This is so exciting. Most of times we’re trying to make tax lawyers seem exciting. So I tell you, it’s we’re getting beaten up this tax lawyers.
David: [00:04:28] It is a very complex area. And I applaud all the tax lawyers that do great work because it’s a very sophisticated area of the law. And so I got my master’s tax and I was hired actually to be a tax lawyer. And I was digging into the tax code day and night, but about two years in. So I was a very young lawyer. And and I talk about this in my book. A gentleman walked in the door, needed a securities lawyer, and nobody in our office did that work. He was referred to my boss, actually, and my boss turned the case down because that was in an area of law that we focused on. And as the gentleman was walking out of the door, I was actually walking to the copier and I literally ran into him and I just started making conversation with him. It turns out he was just telling me about a problem he had with the stockbroker and I was interested in it. So I asked him if he would let me just dig in a little bit. And this was the early days of the Internet back in the nineteen ninety eight. And I started doing a little bit of digging and I figured out what types of claims you can have against stockbrokers and where they need to be pursued. And then I met with him and he said, look, you know, David, I’d really like you to help me. I know you’re young, but I’ve got faith in you. And, you know, I’m not the only one this has happened to. So I’d like you to come meet some other folks.
David: [00:05:36] So I drove my my very old car up to meet him about an hour from my office. And I walk in a room and there’s about one hundred and fifty people there. And they had all suffered the same type of of losses as a result of the single act of a stock broker that happened, it ended up impacting about 250 people, and to make a really long story short, and I go into this a little bit in the book, I ended up filing a class action against Prudential Securities. I was 28 years old and the case took seven years and went through multiple Court of Appeals and remands and this, that and the other. And we ended up with a jury trial in 2002. In fact, I’m looking at the verdict right now above my screen. We got a two hundred sixty million dollar verdict on behalf of the two hundred fifty retirees I represented. The verdict was against Prudential Securities. It was at the time and remains the largest jury verdict in the state of Ohio. And the Court of Appeals did reduce the verdict. But we still ended up recovering all of our client’s losses, plus the attorney’s fees. But that’s the long answer of how I got into the area of investment fraud. I took that case and started my own law firm, and I started representing individual investors, mostly retirees, who have suffered losses as a result of the misconduct of their financial advisor. And I’ve been doing that every day for more than 20 years.
Liel: [00:06:51] That’s remarkable. So when we hear that you’ve got one of the record-breaking jury verdicts that was from a case that you started at the age of twenty eight years old.
David: [00:07:02] Yes, that was three years out of law school. And I put together a team and I had help, but we went up against the basically the endless resources of Wall Street. They had more money than we did, but we had the grit, the fight and the determination. I just was not going to let my clients down. And they were depending on me to restore their financial security that they worked their entire life for. And I mean, we are working all night. My wife was bringing a change of clothes and food to the office. When I started that trial, I had a son who was eight months old. And we try that case for a month. We moved into a bed and breakfast. We moved out the furniture and moved in computers that at that time the computers were really big. Yeah. And we slept there. And the woman the couple who ran the bed breakfast made us breakfast every morning before we went to court. And at night I remembered I don’t know why I remember this, but in the freezer there were stacked with Klondike bars, ice cream bars, and we’d stayed up all night. And I just had this memory of, you know, 3:00 in the morning going over the next day’s testimony or evidence and eating ice cream bars. So to this day, Klondike bars remain one of my favorites.
Grace: [00:08:08] That’s pretty amazing. So this case basically, this is part of your book and it also sounds like it really shaped the future of your investment, you know, the way you basically do business. Would you mind telling us just I know you explained a lot about that particular case, but could you tell us just a little bit more about the process? Because I know a lot of lawyers, they’re looking for a niche. Right. And they’re looking for specifics in practice areas that call to them for lack of a better word. And it sounds like this was almost a calling to you. It kind of fell in your lap. And so could you tell me just a little bit more about the whole case and the experience that you went through doing that? And I mean, Klondike bars, these are the stories that are people want to hear. So if you don’t mind just giving a little more?
David: [00:08:59] Do you mean about how I identified the practice area or more about that specific case?
Grace: [00:09:05] A little bit of both, if you don’t mind, actually, because it was super interesting.
David: [00:09:10] Why so at that point, I had been out of law school for a couple of years and I did have the benefit of a father who was a plane as a personal injury lawyer. And even then and this was twenty-five years ago, the plaintiff’s practice of law was suffering just there’s a lot of pushback, tort reform, more conservative courts. And my father was was just worried for his own practice and for plaintiffs and injured people that the practice of law from a plane, a personal injury standpoint, was going to get more challenging and more difficult and tougher with tort reform. And a lot of that has ended up to be true. Yeah. So he was a missionary, right? So he wasn’t necessarily pushing me to be a plaintiff’s lawyer, but I knew I felt I wanted to be I wanted to have my own business. I wanted to be an entrepreneur. I wanted to be a contingency fee lawyer. But I didn’t I didn’t necessarily want to be an injury lawyer. So then that sort of narrowed. Well, you know, what other type of work can you do on a contingency basis? And I did a lot of research. I mean, I remember I thought I was going to be the mobile home defense lawyer. In fact, I flew down to Alabama as a two-year lawyer to meet with a gentleman who actually wrote the book.
David: [00:10:18] And that was one of the reasons I ended up writing my book Twenty-five years later, I found this guy because he was I don’t remember his name, quite frankly, but he wrote the book on mobile home defect litigation. And I flew down there and, you know, so I did that kind of thing to just to look for types of areas of law that were new. They were niche. There wasn’t a tremendous amount of competition. And so I was looking at that time for a particular case. Now, you know, just it was happenstance that the opportunity came in for this case. But I do believe that that opportunity comes for people. That opened doors, right, there’s a lot of opportunities that come to people that they turn away and they’re too nervous or whatever it may be, they don’t take the risk of actually opening that door. And I was just fortunate that opportunity came. And I was looking for opportunity and they had the support of my bosses that let me do it. And I worked on that case for a year before I with their blessing before I left, I took that case with me to start my own law firm. So, you know, I had a lot of things kind of come together. I tell a lot of people that I think I’m the luckiest lawyer on the planet, but I had a lot of luck.
David: [00:11:21] That case came to the door and I and I and I did have the the wherewithal to really grab onto that case and fight hard for those folks and take a lot of risk. I mean, that case took seven years, so we worked for seven years. We obviously didn’t make any money until the case was over. So, you know, there’s just there’s a lot of things that went into it. But certainly the idea was to find a niche that I thought was underserved, that I thought I could add value to the potential clients, to the community. And then and I had to start building that business before the verdict came in. So I started my law firm in two thousand. We tried the case in 2002. We didn’t the case wasn’t over till almost twenty-seven. So but just working hard to focus on that niche and that more about the case. I mean it was these people were the most wonderful people. They were my clients. There were two hundred fifty members of the class were primarily line workers for a telephone line workers that worked for 20, 30, 40 years to save up their nest egg. And they saw a significant portion of it wiped away as a result of what happened. So, you know, that was really an eye-opening experience for me when I didn’t have any money at the time.
David: [00:12:32] So I didn’t have to worry about a stockbroker or a financial adviser because I didn’t have any money. So this was all new to me. The idea that a broker could do this and that the firm wouldn’t step up and fix it right away. And we learned in the course of the case that Prudential Securities knew what happened immediately. The broker liquidated tens of millions of dollars of securities overnight. Now, he didn’t steal the money. He liquidated into cash and he actually had what he believed were good intentions. He thought the world was going to end. He literally thought, Chicken Little, the world’s going to end tomorrow. So I need to protect all my clients and sell off all their stock portfolio, which he wasn’t allowed to do. The accounts required prior authorization before this gentleman has most accounts do now required prior authorization before he could buy or sell anything. But he did it without authority with the cash for everybody. Now, look, if the market would have gone south and if and if the world would’ve ended, he would have been the hero. But what actually happened following those unauthorized trades and getting tens of millions of dollars? He did it from a little office in Marion, Ohio. It was him and like two assistants. And this was before computers.
David: [00:13:41] I mean, they’re filling out sell orders for tens of millions of dollars of portfolios. It happened on let’s call that day one. Well, the next day, literally the next day, the stock market started going straight up. So, anyone that was in equities and anyone that was invested in diversified in a well-balanced investment portfolio, their accounts would have gone up. But these folks, because they in cash didn’t go anywhere. They stayed in cash. So what had happened the prior several months, accounts, the portfolios were going down. The market was going down. He liquidated what turned out to be the bottom. The stock market goes straight up. And here’s the craziest part about the case. Not only did he give all these unauthorized trades and somehow he wasn’t stopped before he even did it, but prudential headquarters in New York City found out about that the next day. And they did a calculation. And we found this calculation during the course of the case. They did a calculation because the market was going straight up. So to reverse the trades, they’d have to buy back everyone’s position at a slightly higher amount. And they did the math and it was something like two or three million dollars. So they could have rebought everybody’s position that was improperly sold. It would have cost them two or three million dollars. Instead of doing that, they made a conscious decision.
David: [00:14:53] I mean, it was unbelievable. And the depositions we took, they made the conscious decision, no, to try to save two or three million dollars. They’re going to fly a bunch of vice presidents in suits down to Marion, Ohio, a small town north of Columbus, Ohio, and disperse everyone into everybody’s homes and try to convince them to ratify, which is a legal term to try to get them to accept or adopt the unauthorized trade in order for Prudential to escape responsibility. Because if you commit an unauthorized trades, if you later accept it and understand what happened and just agree to it, then Prudential could escape liability. So they went down there and lied to them. Hey, he had your best interests at heart. This is what we’re recommending for everyone, which is not true. They were telling everyone else in the country to buy, buy, buy, except in Marion, Marion, Ohio. They were telling everyone that your broker did the right thing by selling. So the reason why we got two hundred and fifty million dollars in punitive damages is because of the fraud, the breach of fiduciary duty, the fact that they. Intentionally set out to deceive and defraud these retirees in hopes that they wouldn’t catch on, and that was the most egregious part, they always say the cover up is worse than the crime. This is exactly what happened. But know, it took us a long time to I mean, we were fighting Wall Street.
David: [00:16:06] They had the most sophisticated, savvy lawyers from all over the country with limitless budgets. And we were just, you know, a young lawyer at our team in Columbus, Ohio, just fighting the good fight. And it was a battle. I mean, it was the most exhilarating thing that’s ever happened in my career. I laugh that, you know, I was afraid I peaked at 30. But, you know, fortunately, I’ve had a pretty, pretty good career since then. But it was remarkable. And the best part about it is that I got to experience that as a young lawyer. There are so many lawyers, even trial lawyers, that that never have just the opportunity to experience like that. So I’m fortunate that, you know, that the opportunity came. I was proud that I jumped on it and I had the support of a lot of people. And I’m just proud that my clients believed in me. They didn’t need to do that. They could have gone to a lot of other different lawyers, but they believed in me. And it’s and we’ve got a great result for them. And I’ve been able to build just a wonderful career and I’ve been able to help a lot of people over the last twenty-five years. So it’s just it’s really wonderful all around.
Liel: [00:17:10] Very, very amazing. I have a few questions. Try trying to feeling a little bit here of what was happening in between, because obviously, seven years on a case is a very, very long time. Right. And it sounds like this was a very a case that took a lot of resources and time from you. So how were you able to sustain operations to keep the lights on? Right. When you’re working on contingency on a case that it’s taking years to pay back?
David: [00:17:40] So I brought it brought in two other lawyers that had experience in this type of area of the law. And these two gentlemen really became mentors of mine and they were out of state. But I brought them in. And so really, the three of us did this together. So we were able to share the commitment of the time. I relied more heavily on them for the resources that took about a million dollars out of pocket expenses for experts. And I didn’t have that kind of money. So, you know, we worked out an arrangement where the folks that had that were just more experienced and were older and had more resources were able to step in. But so there’s really three of us and we were able to also be able to work on our other cases and just kind of share the work between the three firms. And I mean, we were just working incredibly long hours because you’re right, we had to work that case. Plus I had to feed my family during that time and I was building I was trying to build a business. I was trying to build an investment fraud business. While I hadn’t I didn’t have that verdict yet.
David: [00:18:37] Right. It’s a lot easier to tell people you’re great at something when you’ve got a two hundred million dollar verdict. Right. But I didn’t have that, you know, for many, many years. So I was also trying to generate enough revenue to make a living. Now, fortunately, my wife was a high school teacher, so we lived on her salary for several years. And I’m grateful for that. We’re still together after twenty three years. And I joked that she didn’t intentionally marry a plaintiff’s lawyer. I was a tax lawyer when we got married, so that was a bit of a shock. But I think she’s overcome that. And she was a big part of my book. She was. She edited my book because of her background and expertise. So it was a lot of fun doing that together. But so I did have help try in that case and also focusing on trying to build the niche. And also another thing that helped me with timing. I started my law firm in basically January of 2000. So if you both are pretty young, but in about March of 2000, we had the tech wreck. The market crashed. Yeah. So I was about six months in or really three months into my practice trying to tell everyone that I was the investment fraud lawyer that everyone needed to refer other cases to.
David: [00:19:42] And everyone looked at me like, who would sue their broker? The market’s going up. You’re crazy. You’re never going to get any cases. You’re never going to make any money. And I got a little nervous for a while to quite frankly. But then when the market crashed, turned around, I had two hundred cases before. I really just figured out how to turn my computer on. So I was fortunate that I was just right into it. I had those cases from the tech wreck. I mean, we had hundreds of cases and it was just me and my first employee, Adele, who’s still with me after twenty years. I hired her about a week after my son was born and my son is nineteen. So she’s been with me for 19 years and we really built the business together. We now have fifteen employees and offices throughout the country, but we started together and it’s, you know, that’s the story of how Meyer Wilson, my predecessor firm David Meyer Associates started.
Liel: [00:20:34] And so you were three attorneys handling this big case. What happened after that case went to court, you guys you kept together, or everyone went back to their own law firm?
David: [00:20:46] Yeah. So, yeah, we were three different firms and we got together for this case as cocounsel, and then the other two lawyers continue to work with their firm. So then I went back to my firm and our firm still do a lot of work. We kept in touch all these years. That really is quite a bond that that holds people together. Unfortunately, one of the three passed away early from skin cancer. And that was devastating about five or six years ago. But we were super close. And then we went back to our practices. But that case took from 1999 until the end of 2006.
Liel: [00:21:21] Wow. And following up also now. So now we were after you got these big massive record-breaking jury verdict. What happened to your law firm right after that where like it sounds like you were already busy because you didn’t really have to wait for the jury breaking verdict to explode. It sounds like already on the early 2000s, you were already getting a lot of traction, primarily because of what was happening in the market.
David: [00:21:46] Yeah, so I really started building and I’m sure I got this advice from somebody because I wouldn’t have thought so myself. So when I started the law firm, I obviously had the big case, but I needed to generate some. And this was sort of the Internet was very early. There weren’t, I mean, any websites and there was no pay per click or Google or any of that. So I really built my law firm through direct mail to who I call trusted advisers. So lawyers, accountants, the good financial advisors. I mean. 95% of the financial advisors out there are honest folks who do good work and they actually want to see the industry cleaned up. So, you know, I remember hiring a company to do my first direct mail piece. And I remember the front of it says, do you know how often stockbroker malpractice occurs on the back? It says, I do. And that’s a direct mail piece. I said to lawyers, accountants, financial advisors. And at the time and even today, there’s not a lot of lawyers that do this. But back then there weren’t really any. So and I and I just and I drove around. This was obviously before online continuing education. So I did seminars. I mean, luncheon’s I drove all over the Midwest. And anyone that would listen to me talk, you know, during their continuing education, I had power points and presentations and I would just talk to lawyers. I would talk to accountants, I would go to moose lodges and whatever I could to talk about.
David: [00:23:07] And it’s really the same stuff. I talk about the book. It’s, Hey, I can help you protect yourself and your clients and your loved ones from becoming a victim of investment fraud. And I can also help you help your clients who unfortunately may have become victims of investment by staring them in the right direction. So I can be a value add. So if you’re an estate planning lawyer or a tax lawyer or a divorce lawyer, you’ve got a client who has a problem. If you know me or a lawyer like me to refer them to, then you’re great you add value to your clients. And then if you’re a lawyer, that refers the case to me, so long as it’s ethical, then there can be some cocounsel sharing fees, too. So there’s an opportunity that way also. So it’s really a way to and the book highlights this, too, is it’s really easy to take some basic steps to help prevent yourself or your loved ones or your clients from ever becoming a victim of investment fraud. And I was doing this, you know, twenty, twenty-five years ago. And that is, I hope, an interesting topic. And that got people which did say, look, I want to protect myself. I want to protect my loved ones, my elderly parents, you know, what can I do? So I never have to see a lawyer like you. And then if I do get a call from a client who may have a problem, what do I look for? What are the red flags? And now I know somebody that could help them.
David: [00:24:25] And I’ve gone on sales visits with financial advisors. So, you know, financial advisors are allowed to solicit, they’re allowed to prospect. You know, lawyers can’t really do that one on one, nor should we be able to, you know, in terms of direct solicitation with phone calls and all that. But financial advisors, they’re I mean, they’re out meeting people and they want to look at the account statements. So they’re the ones on the front line, right? They’re the ones seeing statements that they sit down with an elderly couple and they see something and they see some huge losses or some real concerns. And so they’ll bring me in. And so if they want this person to hire them, how about they bring us a lawyer who can help them? I mean, that’s a value add, right? So this person can help their potential client by bringing in an expert, and that will help that financial advisor, you know, potentially get the work to do so and it helps the client. So and if the client’s able to recover money through a case I handle for him, where does that money go with that? Money is going to be deposited with the new financial advisor. So the client does well, the adviser does well. We have additional work. I mean, so there’s a way that it can really benefit everyone. And that’s how I built the business.
Liel: [00:25:33] Your financial advisors are basically the doctors and the auto repair shop owners for the personal injury lawyers, kind of.
David: [00:25:40] In what context, I guess? What do mean?
Liel: [00:25:43] What I’m saying is that the same value that financial advisors add to your practice is similar to what Medical experts, doctors do for personal injury lawyers when they identify a patient for an injury.
David: [00:25:54] Yes, correct. Yes. So I did a podcast yesterday, actually, from a Raymond James adviser. She has a wonderful podcast called From The Vine, I believe. And she’s in Maryland. And when she first called me, she says, I’m a little nervous having a guest on my podcast that sues people like me. And, you know, but once we talk to her, I said, look, first of all, I have a lot of friends who are financial advisors. And the reality is the financial advisors, they want to clean up their industry, just like I’d like to get rid of bad lawyers, just like doctors. I mean, everyone wants their industry to be cleaner and have a better reputation. And, you know, once we talk through that and realize, look, I’m actually can be an advocate for what you do and I could be an asset for your business, but if you see problems, you now know that there’s somebody that can help. And I mean, a significant amount of our cases come from somebody’s subsequent financial advisor, you know, after the one that caused the problems. And it’s been an incredible network. I mean, now I openly speak to financial advisor groups. I mean, you know, I’ve had some rough goings at the beginning before I really explain that I’m not out to get the industry. I’m with them. I want to partner with them, to clean up the industry and improve it.
Liel: [00:27:08] That’s how the message comes across.
Grace: [00:27:10] And they go to the next person, you know? And I mean, like when it comes to things like that, I’ve always felt the same way where it’s, you know, as an example, Liel does agency work, right. Digital marketing. And, you know, we’re constantly teaching people what to look for, whether you hire us or not. You need to look for X, Y, Z. And the only way to do that is to give the information away for free. Right. And talk to the people that are in the network that are directly dealing with your potential clients.
David: [00:27:40] So, yeah, I’m a big proponent of expanding your impact. Right. Expand your impact beyond the four walls of your office and exactly what you’re talking about. I agree with you 100 percent.
Liel: [00:27:51] Yeah. That’s why I’m writing a book as well.
David: [00:27:54] Awesome.
Grace: [00:27:56] So I know that. And I kind of know that this is a no. But how do you feel about the, you know, the awareness by consumers of financial fraud? I mean, people are aware of the fraud, right? We all kind of know, especially after that GameStop thing happened and all of that that went down with GameStop and Reddit and et cetera, et cetera. Do you feel like the consumer, him or herself, actually understands who they can go to, what fraud is and how to identify who if they’re being, you know?
David: [00:28:29] So it’s a great question. And most people I mean, the vast majority of people hear stories like this on a television show or the news and say, well, that’s really unfortunate for those people, but that would never happen to me. I mean, I hear it all the time, people think, and they’re just wrong, quite frankly. They think I’m too smart to educated. I’m too savvy. There’s no way that’s going to happen to me. That only happens to ninety-five-year-old blind widows who have lost their cognitive lost their cognitive function. And while they’re all there are unfortunately widows who fall victim to investment fraud. Most of my clients are educated, sophisticated, but I’ve represented athletes, physicians, CEOs, lawyers. So people need to accept the fact that they’re not going to be exempted from being victims of investment, but they need to realize it could happen to anyone. There are steps you can take that are pretty simple steps that will reduce your chances. But the first rule should just be willing to accept the fact that it could happen to you and just don’t discount it. That’s going to be really unfortunate for other people. But I’m too smart or I’m too savvy or my broker’s honest. I don’t have one of the bad ones. Right. That’s what people think.
David: [00:29:44] I know there are bad people out there, but my broker wouldn’t do that. That’s like saying, in fact, I had this discussion this morning when I’ve got teenage children and I was with some friends having coffee and we talked about something happened to another teenager. And we all say that’s not going to happen to my kid. Well, it does happen. You know, it everybody it happens to a kid who somebodies kid. Right? So when you’re a victim of investment fraud, that is somebody’s family member. That is somebody’s brother, sister, father, son. So it does happen. It can happen to anybody. And that’s the problem is if you think that it’s that could happen to you, your protection goes down and then then you’re more susceptible to it. So and I tell you, these scammers, the ones that are the most dishonest, are unbelievable salespeople. They’re charming, they’re good-looking. They’re dressed well. They appear to drive nice cars. They seem like they’ve got it all. I mean, the Bernie Madoff situation where, you know, they seem so successful that they tell, you know, ten times because they want to seem so. I mean, this is very sophisticated and there’s a lot that these schemers can do to trick you, to let your guard down, and that’s often the biggest problem.
Liel: [00:31:00] David, what you talking about here, I think we. There may be a little bit more of awareness about that nowadays, right. So while you’re very right that many of us live in denial, thinking like it’s not going to happen, we are aware that fraudsters can present in ways that you would not think that there actually are legitimate. I have two questions for you. The first one is how much confidence should one as an investor have in knowing that whomever they’re working as their financial adviser is backed by, say, you, Fidelity or one of the bigger names? Right. Does that mean anything? He’s got a guarantee, because what I’m hearing here is that you’ve just tried a case from an agent based somewhere in the Midwest, but he was part of a bigger institution, one of the biggest firms.
David: [00:31:55] So that’s a common misconception. Just so we’re clear, all the cases I handle are against big firms that have the money to pay adjustment. Right. So we probably get 20 or 30 calls a week. Half those are from folks who just who give money to someone who’s unlicenced, you know, a Ponzi scheme or that or the person who’s who took the money is not affiliated with any company. I can’t do anything in those cases because there’s no entity, there’s no financial institution, there’s no brokerage firm that would actually there to pay adjustments. So we’re talking about situations where there is an adviser, right? They do have a license. They were affiliated with the firm. And it’s still a huge problem. Right. So make sure that we understand that there’s all kinds of fraud. But the cases I handle, I mean, I’ve had a thousand cases. You know, we’ve got six lawyers and we’re super busy, unfortunately, doing this kind of work because there’s so much of it. But every but so these are against agents who work for large firms. But there are a couple of things that everyone should keep in mind. No. One, you should never, ever, ever even think about giving your hard-earned money to someone who is not licensed. Right. So that sounds simple, but I will tell you, I mean, every day, every single day someone calls me. Well, I didn’t know they weren’t licensed.
David: [00:33:09] I met him at church. You know, I met him through a trade group. I met him at the club, you know, whatever it is. So and there are ways that we talk about in the book. But the best thing to do, the first step and if everybody did this before they hired their broker or even for those already working with a broker, if you do even this one thing, you will significantly reduce your chances of ever meeting somebody like me. And that’s looking up your broker advisor on brokercheck.com. It’s a website. It’s run by the securities regulators. It is Broker Check Dotcom, run by FINRA, which is the Financial Industry Regulatory Authority. There’s the folks that govern and that regulate brokers. It’s also run by the state securities regulators. It’s a website. It’s free. You could do it from your living room, wearing your pajamas, sitting on your couch. You could do it twenty times a day and it won’t cost a penny. Now, it’s not 100 percent accurate, and I’ll tell you that in a minute. But you go there, it’s super user-friendly. You type in the name of the broker, the brokerage firm, and the city and your broker, if their license will come up. And, you know, you’ve got to work on the spelling a little bit and sometimes you got to narrow down the search. But it’s very user-friendly. And if the person that you’re thinking about investing with is not on there, there’s absolutely no reason.
David: [00:34:21] I mean, one hundred percent do not ever invest your money with them. And that’s the first step. So then you want to make sure they’re registered with a brokerage firm or an investment advisory firm. And that website will take you to the investment advisory record keeper, too. So there’s two types of brokers. And I don’t want to get super in the detail because the book talks about it. But you need to know whether you’re working with a brokerage firm or an investment advisory firm because they’re regulated differently. They have different standards. And the avenue to pursue a claim is different. But that website is the first place to go. But then and that’s only the first step, because to your point, you could be registered with a brokerage firm. But what if that brokerage firm is tiny and it doesn’t have any money? I mean, John Doe could be a registered representative with ABC brokerage firm. And I’ve had a lot of these cases where you filed the case because there’s a brokerage firm and then the brokerage firm goes out of business. So unpaid arbitration awards is a significant problem. About twenty-five percent of all the cases that go through the entire process to sue a brokerage firm go unpaid. And that’s because there are a ton of firms that are too small. They don’t have any money, they’re undercapitalized.
David: [00:35:31] And I talk in the book about some steps you could take to make sure you’re the firm with which your broker is affiliated, you know, has sufficient assets. But let me tell you one more warning because you mentioned companies like Schwab and Fidelity. Those are great companies and they have a lot of sophisticated compliance and supervision. But there’s a problem that we’re seeing more and more of this on the investment advisors’ side. So not the brokerage firms. So there’s a lot of folks who are registered investment advisors that are familiar with a brokerage firm, the regulated either by the state regulator. By the sea, depending on how much money they manage, they can be independent, they can work for themselves, or they could own their own investment advisory firm. But all those folks need a custodian to hold the money and handle all the paperwork. So Dave Meyer can be an investment adviser. I can get my investment adviser registration and then I could set up my own shop. I don’t need a lot of money. I don’t need a lot of excess capital or anything. I can open up a shot and I can market myself as an investment adviser, a property license. I can maybe get my CFP and then I can affiliate with like a Charles Schwab or a Fidelity or a TD and act as my custodian. So then when I bring in clients, I have the clients write checks to Charles Schwab or whoever it is, and then these people will get my cust.
David: [00:36:53] My clients will get statements from Charles Schwab or Fidelity. And I’m not picking on them. I’m just those are firms that everybody knows. But so the statements that come in the mail and this is what can be really, really problematic for folks because it could be misleading. They’ll see Charles Schwab, the statements they recognize from all the advertising they’ve seen over the last 50 years. They see Charles Schwab, but it says your investment advisor is David Meyer. A lot of people believe inappropriately so often that oftentimes that Charles Schwab is standing behind that person in all situations because they see Schwab. I get calls all the time. Hi. I’m working with Dave Meyer. With Charles Schwab. Well, Dave Meyer in that instance, in our example, works for himself at a small, tiny firm that doesn’t have any money and has no insurance. So there is very limited liability in most cases when you have a custodial agreement with the investment advisor and Schwab and the book talks a lot about this. So people need to understand that. They need to focus on the size and the credibility and the assets of the actual employee, the firm or the or the investment advisor or the broker works because as you mentioned, this right in the beginning of this question, that it does matter for whom the person is working, not just the fact life.
Liel: [00:38:07] David, thank you very much for your answer. Very, very thorough and clear. So I’m now going to shift and look at the more recent times where we’re seeing a new trend of what could potentially also be fraudulent financial advisory. Right. We earlier this year, Grace mentioned it a few minutes ago. GameStop, right. The emergence of these platforms like Robin Hood and such, which are looking at kind of like cutting the middleman, cutting the investor advisors, and giving access through almost kind of like gamified platforms to potential younger investors who come there and make moves on the market and hope to make money out of that. And what’s been highly criticized is the lack of transparency that exists here in the way that transactions are actually happening and the potential that they actually have. And what I want to kind of get your opinion on these, where is this going from here? Are we seeing a new type of productivity where potentially these new software entities maybe can be held accountable? Right. We see conversations about this on Congress happening as well.
David: [00:39:20] I’m very familiar with this. I filed the first nationwide class action against Robert Hood in March of 2020 when they had they were basically shut down for a few days at the beginning of the pandemic. And I’m very involved in that case. And but let me back up. This is a huge problem. And now, luckily, the SEC has, as a new chairman, Gensler and the new administration, they are focused, in my opinion, the new SEC with this new administration is focused on the gamification of stocks and the fact that these companies and Robin Hood is just one of them. There’s more and more, in my opinion. They’re basically social media companies, right. They want to be the Twitter, the Instagram, the Snapchat of stocks. But the problem is they want they’re a tech company, but they forget that they have the same rules and same obligations of every other brokerage firm. I mean, I’ve had cases in and they say, you know, we’re not Merrill Lynch. Well, you have the same obligations, the same regulatory requirements as every other brokerage firm. And I believe and I believe it’s as a result of our class action that they, Robinhood and others like him, have invested heavily on infrastructure and compliance because up because of what happened, they just were not set up for the volume and really the infrastructure to be able to handle that.
David: [00:40:38] I do have a concern and this really blew up with the pandemic because I have a nineteen-year-old son and he was right in the middle of all these game stocks up. I said, Do you realize what I do for a living? You want to buy this crap? And here I am literally I sue brokers for a living. And you want to get into this stuff. This is nonsense. But so these, these kids that used to, they gamble a dollar, ten dollars, one hundred dollars on sports. There were no sports, right? Nobody had any sports to gamble on for a year, and then so everyone turns to Robinhood Hood and the average caccount on Robinhood, I think it’s public, it’s very, very small because they’re just focused on these teenagers, you know, free trading and all the all the social media tactics used when and what these kids are used to. They’re getting slammed now with with with these investments and now the investment opportunity. But you can’t lose a lot of money on Snapchat, I don’t think. Or Instagram. Right. I mean, so you just look at pictures and, you know, these kids stare at the phone all the time, but you’re not gonna lose a lot of money doing that.
David: [00:41:38] You might buy a silly gimmick on Facebook or maybe I’ve done that once or twice. But like, you’re not going to lose your life savings. So it’s it is a real problem because the marketing toward these young kids and these kids, in my opinion, for the most part, don’t have the appreciation. We’ve all heard this tragic story of this of this young kid who killed himself because he thought that he was underwater and margin. It turns out that it was just a wrong number that that was given on his statement. I mean, it’s unbelievably tragic. So there is a lot of regulatory focus on this. I’m about to moderate in about an hour, a town hall with Venera, with the securities regulators. And one of the issues we’re going to talk about is the gamification of stocks. And I think the regulators are stepping up enforcement and I think the brokerage firms are responding. It just took a while and there’s still a long way to go. But, you know, this commission, free trading is really problematic because I’m thanks for lowering the bar and I’m glad you’re opening up this opportunity. But there is the opportunity is it could be financially devastating for folks.
David: [00:42:47] I mean, people can go online and sign whatever paperwork and put all their life savings and lose it. And even if it’s a thousand dollars or two thousand dollars, I mean, it could be your college tuition, your student loan money, your summer job money, your rent money. I mean, that’s happening. And we’ll know when if you lose five thousand dollars, there’s nothing like a lawyer like me can’t do anything right. Because it costs more than that to go through the process of filing fees. A thousand dollars. Right. So, you know, a lawyer like me can’t really help. And most of those situations. So that’s a process that needs an issue that needs to be fixed at Capitol Hill and through the regulators. And I truly believe and I mean, I’m an investor advocate. It’s what I do. And I truly believe the SEC and FINRA and the state regulators are focused on this. And there’s a lot of work to get done. But I caution folks who have teenagers, they need to talk to them. They need to stay on it because that these Robinhood and these commission-free ratings that are just getting bombarded with social media and everything, it’s it is a real problem and it’s causing real harm to our young kids.
Liel: [00:43:50] I think we also that wave just, you know, become kind of like a tsunami like last year. And as you said, it has created some really meaningful damage, particularly in really, really young individuals. I believe there was also a case of a kid who took all of their parents retirement savings and invest in them on GameStop and just things that should or should not be happening. Right, should or should be controlled or should be some level of regulation. And so we’re seeing it in games, in financial institutions it should be across the board, even in media companies like Facebook, Instagram, and such. Right. Even though you’re saying you probably cannot really go and lose their your your life savings are still a lot of harm happening, unintended, maybe harm happening in those platforms. So regulation with moderation, I think it’s actually a good thing, not necessarily a bad one. I agree. David, as we are approaching the end of this conversation, what are three actionable takeaways that anyone listening to this podcast, whether they’re attorneys or whether they’re investors themselves, can do to better protect themselves or their clients?
David: [00:44:58] So the first which we’ve touched on is take five minutes and look up your financial advisor before you invest with them. And if you’re if you have elderly parents, aunts, uncles, sisters, brothers, you know, go there, sit down with them and actually look up your broker. And if your broker has more than one or two complaints, then I think you should find somebody else. And if they have one complaint, then go talk to them about it. And unless they are open and honest and forthright and explain whatever the situation was, about 90 percent of the advisors have less than two complaints. So and now these brokers can go go in that system through a process and get these some of these cases erased. So it’s not I mentioned earlier, it’s not 100 percent accurate, but it’s it’s the only profession I’m aware of that allows you to dig in online for free about any prior customer complaints. They’re testing whether they filed for bankruptcy. So it’s a great asset. And I tell you, half the cases I had would either be much less devastating or not even happened at all if folks would have gone on the front end and looked up their brokers. So do that. And then also if you have elderly. Parents sign on as an additional notifier on the account, so you’ll get copies of the statements that you won’t have trade authority. You don’t have to have power of attorney on the accounts. But, you know, it’s like so my mom is 80 years old. I get a copy of her statements in the email so I can see what happens.
David: [00:46:23] So if my mom isn’t paying attention or isn’t interested or whatever it may be, you can get a copy. Obviously need to get authority from the account holder. But every elderly person who may be alone or may be at risk of suffering kind of clients should have somebody on the account, whether it’s a family member or a lawyer or an accountant, get an extra copy of the account statements and be on the lookout for red flags. A lot of trading, a lot of losses, a lot of volatility. That would be a big help. And a lot of folks don’t know that. Then the final point is don’t be ashamed to step up and protect your rights if you actually have suffered losses as a result of what you may or may not believe may be inappropriate conduct. On behalf of your adviser, don’t blame yourselves. I believe most of these cases never even get pursued, particularly by the elderly, because they’re ashamed. They don’t want to admit that they made a mistake. People internalize financial issues. They don’t want to talk about it. They’re embarrassed. They believe they’re ashamed that they think they trusted the wrong person when there’s just no way to know what somebody might do in the future. So encourage whether it’s anyone in your family or your clients, if you’re a trusted advisor, there’s no shame in asking for help and for somebody to look and review something that you believe, you believe may be a problem.
Liel: [00:47:44] Thank you very much, David, as a whole for joining us for this conversation. I think, you know, there could have been at least material here to talk for another couple of hours, but we’re going to have to leave it for next time. So we would love to have you back again. Good luck with the promotion of the book. We’re going to be linking out to the Amazon page for where users can buy it. And again, thank you, and have a great rest of your day.
David: [00:48:07] Thank you both. I appreciate it. Thank you.
Liel: [00:48:10] Thank you.
Liel: [00:48:24] Grace, what a great conversation with David, right?
Grace: [00:48:29] That was amazing.
Liel: [00:48:30] I mean, it was very yeah, it was very sorry. I think both of us want to see so much that we were just kind of like holding ourselves. Grace, I honestly like as someone who has retirement savings and has been lucky enough to put some money aside to invest in the market and stuff, you know, these are things that you don’t necessarily think, as David was saying, but it can happen to you. Right. And so I think to come up with takeaways here, it’s going to be fairly easy because we already got some very good ones that there is no way we can not just go ahead and mentioning them again. Right. So, Grace, why don’t you go ahead and say the first one, which I think, you know, telepathically, we’re going to both agree on it.
Grace: [00:49:17] So that is go to broker check dotcom.
Liel: [00:49:20] That’s right. That’s right. And bookmark that page.
Grace: [00:49:24] Exactly. I mean, it’s very user-friendly and it makes sense to just do it. These are things that you do anyway. When you look when you go eat, what do you look at? Reviews. So do the same thing. Just go look and see that this person has a license. I mean, you’re not going to hire an attorney without a license. Don’t hire a financial adviser without a license.
Liel: [00:49:44] Yeah. Great analogy, Grace. Right. You know, all users spend an average of 14 times reading reviews on what are the best chewing toys for our pets. We can definitely spend 30 minutes of time or even less finding out who’s going to deal with our lifetime investment savings. So definitely take away No. One, two, and three together.
Grace: [00:50:09] Well, yes.
Liel: [00:50:10] All right. I so take away number two. What should it be?
Grace: [00:50:14] I really liked what he said about being on your parents, especially if they’re elderly or somebody that you care about and being a notifier, obviously, you’re not going to have access to to change anything for them. But just being aware of statements and making sure that there are no red flags popping up, I really like that as a second takeaway, particularly because, you know, for me and you potentially as well in the Latin community, we really kind of help and oversee things when our parents are involved in things just to make sure that everything is being done the right way. And so I really like that second item as a second takeaway for me and for the listeners. And that’s, you know, just be aware of what’s going on with your parents, especially if they’re elderly, and help them keep an eye by being one of the ones added as a notified person for the statements.
Liel: [00:51:12] Raised by the group, by the book, and give it to people that you care about. Right. I mean, sometimes that’s the best you can do is offer the resources and let them be the ones who discover the potential threats and opportunities that they may have not been acknowledging. So, yeah, I agree. There are different ways that you can step in and help. Not everyone wants to have someone come and tell them, do this, do that. But sometimes you just make the resources available from them and you see them actually find solutions to problems that probably they didn’t know existed. So very good one, Grace, which would be our last one.
Grace: [00:51:49] So for me, it’s it kind of plays into a lot of our takeaways in all of our podcasts. And that’s, you know, don’t be ashamed in a way to reach out, find information and stand up for yourself. I know it’s different in all of our different topics because we talk about different things, but reaching out and making yourself aware, but also not feeling like it’s your fault if something happened to you. I think that’s an important takeaway. I want people to feel empowered by the information. And like you said, Leo, by the book, you know, and if you see something that’s happened in there, don’t be ashamed to to say something, you know, to reach out to someone like, you know, Meyers law firm. Don’t be ashamed to to go on to broker check dot com and fire your financial advisor if they have more than a few complaints, like you said. So that’s what I mean by don’t be ashamed and taking from his third takeaway. Stand up for your rights and make yourself aware. That’s the only way to be able to protect yourself and mitigate risk.
Liel: [00:52:58] Yeah, it was a very good takeaway there, and as as you say, there is really no shame in asking for help. I know it’s easier said than done. Different scenarios. Different people take that a different way. But I think one thing that we can all no pun intended here about to take away from this conversation is that there are people out there that can potentially be a source for finding a solution to problems that you may have been too overwhelmed with and not really know who could potentially help. And so by by the sound of it, David’ss office gets, you know, hundreds of calls. And many of them they can help, many of them they can’t. But it sounds like even those that they can’t, they still try to find ways to set them on the right track. Right. And so I think that’s kind of like the third takeaway is like pick up the phone, ask, and you’re probably going to find a direction of where to go by by asking people for help.
Grace: [00:54:10] Very true, ask for help.
Liel: [00:54:12] That’s right, Grace. OK, well, Grace, another great conversation and so we’ll be back next week. And thank you so much for your time and thank you, David, again for this great conversation and check the notes for a link to the book.
Grace: [00:54:26] That’s right. We’ll see you all next week again.
Liel: [00:54:29] All right. Thank you. Bye.
Liel: [00:54:34] If you like our show, make sure you subscribe. Tell your co-workers, leave us a review, and send us your questions to firstname.lastname@example.org. We’ll see you next week.