Are You a Victim of Stockbroker Fraud?

  • Investors aren’t usually surprised when they suffer some losses on the stock market or through other investment opportunities. But, it’s understandable to question what went wrong when considerable losses occur because the broker or financial advisor didn’t make suitable investment suggestions and there is seemingly no valid reason for the investment loss. 

    Unfortunately, stockbroker fraud is far more common than you might think. If you suspect that your broker is taking advantage of you, it may be in your best interests to reach out to an experienced investment loss lawyer to discuss your options for financial restitution. 

    But, if you don’t know whether you’ve been defrauded by your broker, you’re probably hesitant to contact an attorney. Continue reading to learn more about the most common types of broker negligence, signs that you might have been a victim of stockbroker misconduct, what rules the Financial Industry Regulatory Authority (FINRA) has in place to protect investors, and the steps you can take to recoup your investment losses.

    Types of Broker Negligence You Need to Know

    Stockbrokers and brokerage firms are able to get away with defrauding their investors because financial markets are always fluctuating. Plus, investing can often be complex unless you do it for a living and are diligent in your research prior to agreeing to an investment. 

    For this reason, it often isn’t until an investor has lost a significant amount of money that they realize their broker has been prioritizing their own financial interest. However, stockbrokers will often defraud investors in well-known ways simply because they’ve been able to get away with it in the past. The most common types of broker negligence and fraud include:

    • Selling away
    • Churning
    • Making unsuitable suggestions
    • Failure to diversify
    • Misrepresentation
    • Omission
    • Failure to supervise

    There are many other ways your stockbroker could defraud you, and you should speak with a lawyer to determine whether fraud has taken place prior to initiating a FINRA arbitration lawsuit. 

    Common Signs of Stockbroker Misconduct

    Although brokers are often able to defraud investors for significant amounts of time before their schemes are uncovered, there are some common signs to watch out for. They include:

    • Numerous transactions in your accounts
    • Unexplained losses or gains 
    • Losses in which similar investments saw gains
    • Unauthorized transactions
    • Investments that don’t align with your investment portfolio goals
    • Being pressured to act on an investment opportunity

    FINRA Rules Protecting Investors

    Although stockbrokers are known to defraud investors for their own financial interests, FINRA and the U.S. Securities and Exchange Commission (SEC) have rules of conduct in place that registered brokers are required to follow. This is also known as the stockbroker’s fiduciary duty. 

    Here, a stockbroker must keep your best interests in mind when making investing suggestions and recommendations, follow the objectives you’ve set in your investment portfolio, provide you with the information you need to make a well-informed decision, and more. 

    What to Do If You've Suffered Considerable Stock Losses

    If you believe you are a victim of stockbroker fraud, you can do something about it. FINRA allows wronged investors to initiate a complaint against their brokers and be granted a FINRA arbitration hearing. This hearing is your opportunity to present evidence that demonstrates fraud has occurred. 

    The good news is that in the financial industry, almost everything leaves a paper trail, so your attorney shouldn’t have trouble proving misconduct if fraud did occur. 

    Your hearing will be arbitrated by either one arbitrator if your losses were less than $100,000 or a panel of three arbitrators if your losses exceeded $100,000. Both your attorney and the respondent have the opportunity to argue your version of events and present evidence to support your case.

    The arbitrators will then retire to deliberate and determine whether fraud occurred, and if it did, how much compensation you should be awarded. You cannot appeal arbitration decisions. Despite this, many wronged investors choose arbitration over a lawsuit, as there is a greater chance that you can recover your losses sooner through arbitration. 

    Contact a Stockbroker Fraud Attorney for Help Recouping Your Losses

    You always take a risk of lost money when investing in the stock market. But, when fraud was the cause of your financial losses, you have the opportunity to hold the fraudulent stockbroker to account. Team up with a diligent stockbroker fraud lawyer from Wolper Law Firm. A confidential consultation is available when you call 800-931-8452 or visit our website to learn more.