Do you have legal options when someone loses your 401K?

You depend on your retirement fund for most of your income in the later years of your life. Knowing this inspires many people to save as much as possible during their working years. Whether you're retirement plan is through an employer-sponsored 401k or with an independent investing company, you trust that the person handling your retirement account will do so responsibly.

Generally speaking, most financial advisors and investment professionals do their best to protect the money with which their customers entrust them. Sadly, not all professionals live up to this standard. It is possible for someone entrusted with the money you would depend on for the rest of your life to lose everything, leaving you with nothing for your retirement.

If you or someone you love has experienced this terrible financial setback, you may need to explore your legal options for compensation.

Was there a breach of fiduciary duty?

The most important step to determining your rights after the loss of the funds you have saved for retirement is establishing whether the professional involved breached his or her fiduciary duty to you and other investors. Fiduciary duty is a legal term that refers to a professional's obligation to act in your best interest, not his or her best interest.

A breach of fiduciary duty can look like many different things. In some cases, it could mean buying stock in a company owned by a friend or relative that the investor knows is on shaky ground. It could also look like making trades, from which he or she will receive some kind of profit or kick back, regardless of how it may affect your savings.

Finally, acts of gross negligence and oversight can also be a breach of fiduciary duty. After all, you are expecting that the professional you trust with your retirement funds will, in fact, comport him- or herself in a professional manner in every trade.

Insurance claims or lawsuits may be possible after a major financial loss

If you have any reason to believe that the person managing your retirement fund acted in his or her own best interest instead of yours, failed to handle your account with care or otherwise overlooked the basic responsibilities of the position, you may have a case for breach of fiduciary duty.

Depending on the situation, there may be professional insurance held by your investment professional that will compensate you for your losses. In other situations, it may be necessary to pursue legal action in court. While it can seem nerve-wracking to take somebody you trusted with your retirement plan to court, it may be the only way for you to recoup those losses and regain some of your retirement fund.

After a major financial loss caused by questionable investments, you should not have to pay the price. Since your retirement fund has already been lost or substantially diminished, you don't have much to lose by investigating your options.

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  • United States District Court | District Of Arizona
  • Maricopa Country Bar Association
  • State Bar Of Arizona
  • United States Court Of Appeals | Ninth Circuit

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