Stockbroker Fraud & Misconduct Attorneys
STOCKBROKER MISCONDUCT & YOUR LEGAL RIGHTS
At Price Armstrong, our attorneys have the resources and expertise to represent investors in stockbroker fraud cases. We are dedicated to recovering your financial loss and to holding those involved responsible.
We understand that our clients have worked hard for their investments, and when that investment is negatively impacted, the financial setback can be matched by a sense of betrayal and the need for justice. Finances can be negatively impacted through negligence, fraud, a failure to supervise or a failure to adhere to industry rules and standards. The web of financial rules and regulations can make pursuing a case against stockbroker misconduct daunting. But the attorneys at Price Armstrong can help.
WHAT IS STOCKBROKER FRAUD?
Stockbroker fraud differs from market loss or risk and occurs when a broker puts their personal financial interests before the investors’ best interest. Brokers and financial advisors work from a position of trust and are expected to work for investors and look out for their financial interests. But all too often, this trust is broken.
Stockbroker fraud occurs when brokers, and the firms they work for, may convince their clients to purchase investments which are not appropriate or suitable. These investments may rely on incomplete or misleading information or fraudulently put the brokers financial gain ahead of their clients’.
Stockbroker and investment professionals have a legal duty to carefully manage investor finances. When a broker fails to meet this standard of professionalism and care, the investor may make a claim against the broker and their firm for negligence and broker fraud.
STOCKBROKER’S FIDUCIARY OBLIGATIONS
An investment fiduciary is any person who has the legal responsibility for managing somebody else’s money. This means a stockbroker is placed in a position of trust and there are consequences for betraying this trust. Stockbrokers have fiduciary responsibilities to their clients that must be upheld, including:
- Acting in their clients’ best interests
- Disclosing material information
- Avoid conflicts of interest
- Provide expert and quality advice
When any of these duties are violated or neglected, the investor has a case. Contact the stockbroker fraud lawyers at Price Armstrong to help you navigate the complexity of a stockbroker fraud case.
COMMON TYPES OF STOCKBROKER MISCONDUCT
There are numerous types of stockbroker fraud or investment fraud that our firm handles, and it is not uncommon for our firm to pursue complex financial claims that do not fall neatly within preexisting categories. However, the most common types of investment fraud cases we pursue include:
UNSUITABILITY OF INVESTMENTS
A broker is required to make investment recommendations that fit with an investor’s objectives, tolerance for risk, and needs. This requires a broker to be familiar with an investor’s portfolio and the investments or investment strategy the broker recommends. This requirement is called suitability. Often, investment losses are caused by unsuitable investment recommendations. Our attorneys have the experience to determine the best course for your unsuitability claim.
FRAUD, MISREPRESENTATIONS OR INCOMPLETE INFORMATION
When a broker omits important facts, lies about an investment, or does not reveal conflicts of interests, investors can be damaged. Stockbroker fraud is common where a broker puts its own interests in front of those they should be serving.
LACK OF DIVERSIFICATION
Diversification is a basic, and important principle of investment. By recommending an investment portfolio that is diversified over a range of industries and investment types, investment risk can be limited. However, often brokers fail to diversify investment portfolios and overconcentrate investments in a particular sector or instrument. They are essentially gambling based upon their beliefs as opposed to the needs of the investor.
When a broker excessively buys and sells stocks for the sole purpose of creating more commissions and fees, this is considered churning. Large volumes of trades and losses unconnected to market fluctuations can be indications of broker churning. LEARN MORE >
FAILURE TO SUPERVISE
Brokerage firms and financial advisors have a duty to adequately supervise their brokers and ensure that those brokers are acting properly and abiding by securities laws and rules. When there is stockbroker fraud or negligence, the brokerage firm or advisor may also be liable.
Brokers who do not fulfill their duty of care to their investor clients may be liable for that negligence when it results in financial losses. This can include instances where there is also a breach of fiduciary duty by a broker, a failure to diversify, a failure to supervise and other negligent conduct.
This type of broker fraud can be committed in a variety of ways, but typically occurs when someone makes a false claim about a company or its stock value, and others make purchase or sale decisions on the basis of that false information.
TYPES OF INVESTMENTS WHERE NEGLIGENCE OR FRAUD MAY OCCUR
Investors can often be harmed through unsuitable investment recommendations that involve any number of different types of investments. However, the most common types of investment fraud cases we pursue involve:
Brokers often recommend variable annuities, particularly for senior investors, for their tax-deferred growth. Unfortunately, negligent or unethical brokers can push these high-commission investments even when they are not appropriate or too risky.
PRIVATE PLACEMENT INVESTMENTS
Private equity investments and private offerings do not have to register with the SEC and often are not subject to SEC rules. Often these investments are in the energy or oil and gas sector or in the real estate sector. Private placement investments that are inappropriate for the high-risk profile they carry, or which were sold with incomplete or misleading information can lead to investment losses and are grounds for arbitration.
Mutual funds, closed-end funds, and exchange-traded funds can be a risky investment for investors and often have a fee structure which can benefit brokers. When unsuitable mutual funds are recommended as investments or when the risks of specific funds are not adequately disclosed, investment losses can result.
Cryptocurrencies and initial coin offerings are an increasingly common area of investment fraud. Investors are promised high rates of return only to find that their investments dramatically lose value or cannot be sold.
WHAT ARE MY RIGHTS IF I AM A VICTIM OF STOCKBROKER FRAUD?
Investment companies and stockbrokers are subject to a number of laws and regulations. All brokers and financial investment companies owe their investors a duty of:
- Making suitable recommendations
- Adequate supervision
- Good faith and fair dealing
As an investor, when your stockbroker or advisor does not fulfill their duties to you—or acts outright fraudulently or in their own financial interests—you have rights. Among these is the right to:
- Ask for and receive clear and complete information regarding the risk and obligations involved in your investment
- Receive full disclosure of the commissions, fees, and charges you may incur with your investment
- Receive recommendations and advise for your investments that are suitable for your particular needs and goals
- Receive access to your funds at any time
- Be provided with truthful information about the background of the financial brokers who work with you or handle your investments
WHY YOU NEED A STOCKBROKER FRAUD ATTORNEY
If you suspect that your stockbroker or investment advisor is acting in their best interests instead of yours, it is crucial to contact an experienced stockbroker fraud attorney. Without legal representation, it is difficult to recoup the money that you have lost. An attorney can help you navigate the complexities of broker agreements and arbitration.
If you have information relating to insider trading, Ponzi schemes, stockbroker fraud, or investment corruption, speak to one of our stockbroker fraud attorneys. All consultations are confidential and there is never any cost to our clients until we recover.
STOCKBROKER FRAUD FAQS
Most investment negligence and fraud are not addressed though a case in court, but through FINRA arbitration. FINRA is the Financial Industry Regulatory Authority, a non-profit, non-governmental organization that establishes rules for the broker and brokerage firms. Usually, the contract you entered into with your investment broker mandates that any claims must be addressed through arbitration, and limits your ability to pursue financial fraud or negligence claims in court. Arbitration can be very different than pursuing a traditional court case, and FINA arbitration is further specialized subset. Hiring attorneys familiar with this process is important to maximizing your chances for a successful recovery when you’ve bene injured by broker misconduct.
The investments or retirement funds you have worked hard for and carefully set aside can be lost in a moment when dishonest brokers or brokerage firms engage in fraud or negligence. If you have experienced a loss in your investments that you believe may not be due solely to market changes, you may be able to recover those losses. Often, brokers use their position of trust to make recommendations that are unsuitable or take actions which line their own pockets. It can be difficult to know when your investment loss is due to misconduct or negligence given this position of trust and the investment expertise a broker purports to represent.
First, make sure that you keep all statements, communications, and other documents that you think may be relevant. Second, understand your rights. If you are a victim of financial fraud, you are protected under state and federal laws and regulations and have a right to recover your losses. Third, contact an experienced stockbroker fraud attorney to evaluate your potential claims, determine if your financial losses are the result of negligence or fraud, and pursue a case on your behalf. Fourth, an investor fraud attorney may also be able to recommend additional regulatory actions to ensure that others avoid similar fraud and that those responsible are barred in the future.
Stockbroker investment fraud and FINRA arbitration is a specialized area of the law where experience matters. You need to know that the securities fraud law firm you hire has the expertise and the resources to determine the best course for your case and to maximize your chances of winning on your terms.
CONTACT US FOR A FREE CASE EVALUATION
If you have suffered financially because of broker fraud or misconduct, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!