Breaking Down Stock Broker Fraud
As you know, investing
in the stock market can be a risky proposition. Markets and investments
can fluctuate, and the majority of investment losses result from
such fluctuations, rather than from stock broker fraud or misconduct.
However, stock fraud does happen, and you should understand common
forms of stock broker misconduct.
If you suffer loss of your savings due to one of the following
common forms of stock broker fraud or misconduct, it is not your
fault and you may have a right to recover losses. Contact
the Consumer Justice Group immediately if you have experienced
any of the following forms of fraud in dealings with your stock
broker:
-
Unsuitability
-
Overconcentration
-
Churning
-
Unauthorized
Trading
Misrepresentation/Omission
Unsuitability: This is perhaps the most common of investor claims. Before making
investment recommendations, your broker has an obligation to attempt
to learn accurate information about your financial needs. Based
upon that information, your broker has an obligation to make only
those investment recommendations that are in line with or suitable
for your needs.
Overconcentration: Failure to diversify a client's portfolio can be a form of stock
fraud. In order to protect your savings, your broker should vary
the types of stock purchased rather than placing all your assets
in a small number of stocks or a single economic sector, such
as high risk technology stocks.
Churning: If you notice your broker has bought and sold the same stock two
or more times in a month, you may be the victim of excessive trading
or churning. Each time a stock is bought or sold, your broker
earns a commission, often against your best interests as an investor.
Unauthorized
Trading: This type of fraud occurs when your stock broker
makes trades on your account without your prior authorization.
Your broker must get your consent before any of your stock is
sold or new stock bought.
Misrepresentation/Omission: Misrepresentation of various forms is seen in many of the cases
detailed on this site. This form of stock fraud occurs when
your broker intentionally gives you misleading information regarding
stocks, such as making guarantees regarding stock performance
or failing to accurately disclose a stock's risk.
Did
your broker:
- Put
your retirement savings in risky technology stocks?
- Advise
you to buy on the margin?
- Invest
most of your savings in a few "hot" stocks?
- Buy
and sell the same stock more than twice?
Contact
the Consumer Justice Group immediately if you have experienced
any of these forms of fraud.
The Investment & Stock Fraud News is a service of the Consumer Justice Group. |