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.

Contact a Stockbroker Fraud Attorney

TYPES OF STOCKBROKER FRAUD CASES WE TAKE ON

Investment fraud can take many forms. Price Armstrong has the expertise to pursue cases in a variety of areas, including:

SELLING AWAY

When a broker sells you a product that isn’t approved by their firm and without the firm’s knowledge or supervision, you’ve been a victim of fraud. The broker may have you believe that this outside investment is endorsed by their firm, when in reality, it’s not, putting you at risk of losing your money because the firm is not supervising the sale according to certain rules. LEARN MORE >

PYRAMID & PONZI SCHEMES

In a Ponzi scheme, investors are sold on a financial instrument that promises to pay aggressive returns. Early investors are paid with the funds from later ones, and the scam perpetuates as long as new investors are willing to buy in. In a pyramid scheme, participants are aware that their returns are dependent upon two things—selling products and recruiting new members to the organization. LEARN MORE >

AFFINITY FRAUD

This type of investment fraud targets an identifiable group of people who share a common bond (a religion, a profession, an ethnic identity, etc.) and in which the fraudster often is, or pretends to be, a member of that group. The fraudster will use new investor money to pay earlier investors, tricking new investors into the scheme while making current investors believe their investment is secure. LEARN MORE >

CHURNING

A stockbroker may execute an excessive number of trades in a customer’s account for the purpose of generating fees and commissions for the broker. It’s illegal and unethical – a clear breach of the broker’s duties to the client. LEARN MORE >

UNAUTHORIZED TRADING

This occurs when a broker engages in a trade on behalf of a customer without the customer’s permission. No matter the motivation, unauthorized trading is illegal and brokers who choose to overstep their authority potentially face severe penalties. LEARN MORE >

MUTUAL FUND FRAUD

Deceptive practices include a variety of activities like urging a client to invest in a fund without explanation of fees, risks, and other costs, ignoring an investor’s goals and advising a client to excessively trade their funds to make more commissions. LEARN MORE >

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.

Price Armstrong Attorneys at Work

COMMON TYPES OF INVESTMENT FRAUD

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.
  • Churning – 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.
  • 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.
  • Negligence – 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.
  • Securities fraud – 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:

VARIABLE ANNUITIES

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.

INVESTMENT FUNDS

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.

CRYPTOCURRENCY FRAUD

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
  • Disclosure
  • 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:

  1. Ask for and receive clear and complete information regarding the risk and obligations involved in your investment
  2. Receive full disclosure of the commissions, fees, and charges you may incur with your investment
  3. Receive recommendations and advise for your investments that are suitable for your particular needs and goals
  4. Receive access to your funds at any time
  5. 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, investment corruption or FINRA violations, speak to one of our stockbroker fraud attorneys. All consultations are confidential and there is never any cost to our clients until we recover.

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STOCKBROKER FRAUD FAQS

What is FINA securities arbitration?

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.

How do I know if I have a stockbroker fraud case?

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.

What do I do if I think that I am a victim of broker fraud or negligence?

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.

How do I choose a stockbroker fraud attorney?

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!