Stockbroker Fraud
Stockbroker fraud or investment fraud can involve a brokerage firm, stockbroker or an individual advisor. It often involves transactions that are not in the best interests of the investor, but rather designed to enrich the brokerage firm or the advisor. This can also include sharing biased, inaccurate or incomplete information to the investor.
Stockbroker fraud can involve penny stocks as well as multi-million dollar transactions, made by a single employee or by a corporation. Members of the investment community, including, stockbrokers, brokerage firms, financial advisers are required to handle investor transactions with integrity and due diligence. There are federal and state securities laws based on rules and best practices adopted by the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD). An investor may file a stock fraud claim against a brokerage firm or an individual broker for failing to meet the customary level of competence and standard of care maintained by stockbrokers in general.
Common types of Stock fraud practices include:
Stockbroker fraud can involve penny stocks as well as multi-million dollar transactions, made by a single employee or by a corporation. Members of the investment community, including, stockbrokers, brokerage firms, financial advisers are required to handle investor transactions with integrity and due diligence. There are federal and state securities laws based on rules and best practices adopted by the New York Stock Exchange (NYSE) and the National Association of Securities Dealers (NASD). An investor may file a stock fraud claim against a brokerage firm or an individual broker for failing to meet the customary level of competence and standard of care maintained by stockbrokers in general.
Common types of Stock fraud practices include:
- Churning – Churning is a type of stock fraud that cleverly hides behind a volume of transactions comprised of the sale of stocks with small gains in order to show a profit.
- Unsuitability – Unsuitability is a type of stock fraud that occurs when a broker strongly recommends stocks that are not in the investor’s best interest and is usually a major loss for the investor.
- Misrepresentation/Omission - Misrepresentation/Omission is a type of stock fraud that involves not fully disclosing the risk factors associated with the purchase of a particular stock.
- Over-concentration - Over-concentration is a type of stock fraud that involves not properly diversifying and investing in multiple areas and over-concentrating in one area.
Other types of Broker-related stock fraud can include the following:
- High pressure sales tactics
- Failure to place an order when instructed
- Unauthorized trades without investor consent
Unfortunately, in recent years, several major brokerage firms have failed to act with integrity and have come under investigation for insider trading, including well known firms such as Salomon Smith Barney, Credit Suisse First Boston and Merrill Lynch. Stockbrokers and advisors are provided guidelines from the Securities Exchange Commission. These guidelines are provided in an effort to ensure that stockbrokers are giving investment advice clearly and consistently and are not putting their clients at risk with stock fraud.
If you or a loved one have been a victim of stock fraud, contact an experienced stock fraud attorney to discuss your options. You can fill out the form to the left for a free case evaluation or call Toll Free 1-888-777-3884, if you want to discuss your matter.
If you or a loved one have been a victim of stock fraud, contact an experienced stock fraud attorney to discuss your options. You can fill out the form to the left for a free case evaluation or call Toll Free 1-888-777-3884, if you want to discuss your matter.