Did You Know?
Out of a survey of 122 mutual fund companies and brokerages surveyed by the SEC, 25% allowed certain investors to engage in late-day trading
Broker fraud can occur in a variety of forms. Broker fraud includes theft, lying and deceit, but it also includes other types of wrongdoing, such as churning, unauthorized transactions, unsuitable investments and other acts of greed, incompetence and negligence by stockbrokers, financial planners, and others in the securities industry.
Securities regulators police the securities industry and issue fines and suspensions. To recover their losses an investor must file claims for recovery as soon as the fraud is discovered. Receiving bad advice by broker firms is more common than you may think. Last year the Securities and Exchange Commission, other securities regulators and major U.S. securities firms reached a $1.5 billion global settlement involving the issue.
Claims by Investors Against their Stockbrokers and other Investment Advisors Include:
Problem Signs for an Investor to be Aware of Include:
- Inconsistency between the broker's verbal statements and the performance of the investments
- Misrepresentations by the broker, or important information about an investment which the broker did not disclose particularly regarding risk
- Frequent and excessive trading in the account, including in and out trading
- Trading in high risk, speculative or unsuitable investments
- Trading in securities and strategies that the customer cannot understand
- Trades which the customer did not previously authorize
- Trading in low value securities or obscure companies on foreign exchanges, or private investments
- Failure of the broker or his supervisor to be responsive to complaints
- Repeated promises by a broker to make up for losses through various devices
- The loss of funds or value in the account which the customer cannot understand and the broker cannot reasonably explain.
Stock Broker Legal Teams
Most large brokerage companies have entire legal teams of attorneys "in house" in their legal departments, and also frequently retain large, outside law firms to represent the brokerage company in arbitrations. These are highly trained and experienced professionals who are paid to zealously take the side of the broker and brokerage firm. They usually know how the system works, they mean business, and when they feel it is appropriate they play hardball.
It is generally advisable for an investor who believes that he has been defrauded by a stockbroker to consult with an attorney and to have the benefit of legal counsel in preparing and presenting the claims on his behalf. An experience securities fraud attorney may be able to negotiate a settlement for the an investor prior to any arbitration hearing.
Stockbrokers Are Trained Sales Professionals
Stockbrokers are primarily compensated on a "transactional" basis, meaning that they are only paid when buying or selling stocks for their clients. This is the fundamental conflict between the financial objective of the client and the financial objective of their broker. There are many ethical and professional registered representatives in the industry today, but it is the unprincipled minority that perpetuates the stereotype of the fast-talking, manipulative stockbroker.
Stock Broker Requirements
- Stock brokers are not required to possess a college degree
- Stock brokers Can be licensed in less than two months
- Stock brokers m ay have no investment experience
- Stock brokers a re not required to meet net worth requirements
- Stock brokers a re compensated when buying and selling stocks
- Stock brokers a re trained to memorize dialogue to overcome client objections
If you're too busy to actively manage your account, at least check your monthly statements or glance online at your positions once in a while. Communicating with your broker on a regular basis will help prevent poor investment selections.
CONTACT A SECURITIES FRAUD ATTORNEY IN YOUR AREA
Statistics demonstrate that you are far more likely to recover financial losses if an experienced attorney represents you.
If you are in need of legal advice or services, or simply wish to speak to an attorney who has successfully handled Securities Fraud Litigation in your state, you may use our Free Online Consultation Form.
There is NO COST or obligation for this service.
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