WHAT DOES FINRA DO?
FINRA oversees and regulates registered brokers and brokerages in the United States. It also investigates broker and brokerage fraud complaints.
Violators pay fines and face suspension or termination of their registration when violations occur. They may also face criminal prosecution, depending upon all the circumstances. FINRA reports the United States has:
- 617,549 – Registered brokers and financial advisors
- 3,435 – Securities firms
- 79.7 Billion – Market transactions processed every day
FINRA requires brokerage firms to provide customers with written notifications of trade confirmations during or prior to the transactions. Brokerages also must provide account statements so that clients can review transactions and ensure they authorized each one. Unfortunately, many investors do not review their account statements regularly, or at all, so they do not recognize that fraud has occurred until it is too late.request free consultation
Occurrences of Broker Fraud in the U.S.
With so many registered brokerages processing billions of dollars in daily transactions, which FINRA refers to as “market events,” there is ample room for broker fraud to occur. In 2020, FINRA reports, it referred for prosecution 970 cases of fraud and insider trading. FINRA says it barred 246 brokers from further trading and suspended 375 others. Also, FINRA expelled 2 firms and suspended 2 others for brokerage fraud and similar violations.
Those receiving FINRA’s wrath for violating the nation’s laws governing broker and brokerage fraud paid $57 million in fines. FINRA ordered another $25.2 million in restitution. Restitution offsets the money defrauded from investors, but often does not get paid in full.
OUR BROKER FRAUD ATTORNEY SEEKS MAXIMUM COMPENSATION FOR INVESTORS
Unfortunately, as the numbers highlight, stockbroker fraud and misconduct happen all too frequently. But as these statistics also show, many brokers get caught and pay the price for their misdeeds, as they should. If you have lost significant money due to a dishonest broker or brokerage firm, you may be able to get restitution by filing a claim for arbitration or mediation through FINRA. While making a claim through FINRA is often the most desirable way for an investor to recover their money, in some situations a civil lawsuit through the court may be a viable option.
Once we learn the unique details of your case, we will advise you about the best option for your circumstances. Our experienced broker fraud attorneys have recovered money for investors in over 99% of claims. Contact us to learn more about how we may be able to help you, too. When brokers fraudulently take the hard-earned dollars of innocent investors, they should be held to account for their actions. We work hard to maximize the value of every case we handle.
BROKER FRAUD FAQS
Broker Fraud Attorneys Answer Common Questions
Here are answers to frequently asked questions about how investors can recover money lost to broker fraud. For answers to your individual questions, reach out to our law firm to schedule a free consultation by calling us at 800.931.8452.
You can file a claim for arbitration or for mediation with FINRA. When a claim goes to arbitration, independent arbitrators selected by the parties involved hear evidence and arguments for both sides–investors and brokers/brokerage firms–and decide the outcome. Depending on the dollar value of the claim, either one or three arbitrators will hear the case and make a decision. Unlike in a civil lawsuit, the decisions in FINRA arbitration are final and cannot be appealed.
Claims may also be resolved through mediation with FINRA. In this process a neutral mediator works to help resolve the claim and help parties reach a settlement. However, mediation through FINRA is voluntary, so both sides in the claim must be willing to go this route.
FINRA does not require investors to have an attorney to file a claim for arbitration. However, because arbitration decisions are final and cannot be appealed, it is highly recommended that investors work with experienced broker fraud attorneys in FINRA arbitration claims. You stand the best chance of getting an award with the help of a lawyer who understands how to identify evidence of securities fraud and prove it to arbitrators. Additionally, the broker and/or brokerage house that you filed the claim against will most definitely have lawyers representing them who are highly skilled in securities law. You will level the playing field by having a broker fraud attorney represent you.
Our attorneys have previous experience defending the brokerage firms that they now hold accountable on behalf of defrauded investors, which provides them comprehensive experience on both sides of these issues. Our broker fraud attorney can also represent your interests if your case goes to mediation instead of arbitration.
Whether you can sue for broker fraud in court depends upon whether you have an arbitration agreement in place with your brokerage firm. Many firms require their clients to sign arbitration agreements restricting them to having disputes resolved through FINRA. When our broker fraud lawyer meets with you in a free consultation, we can review the documentation you signed when you opened the account with your brokerage firm to determine whether you are eligible to file a lawsuit. If you can, we will explain the steps for how to sue a broker or how to sue a brokerage firm, and whether a lawsuit may be more beneficial (or not) in your case than going to arbitration.
The average arbitration case through FINRA takes approximately 16 months from filing a claim to reaching a decision. If the decision goes in your favor, the broker/brokerage firm who committed the fraud will be ordered to pay you compensation within 30 days. If your case can be settled, it usually takes around 12 months. Cases that go to civil court can take much longer to be resolved because of the appeals process. Even if a judge decides in your favor, if the broker and their firm file appeals, it could potentially take years to get recovery of your money.
“Matthew Wolper is the consummate attorney who showcased his knowledge, legal skills and client dedication while representing my interests. His unfaltering attentiveness and expertise were evident from the start, and we’re further displayed throughout our successful lawyer/client relationship. I would not hesitate to highly recommend the Wolper Law Firm.” – Barton H.
Exercise Diligence to Help Stop Broker Fraud
In many cases, more than one firm services an individual investor’s account. For example, one firm may deal directly with investors, provide advice, and take trade orders, while another firm will execute those trades on the market. Each step in a financial transaction is an opportunity for someone to commit fraud. Unscrupulous firms and their brokers can collude together to steal investors’ money, or they can act alone. But they all depend on concealing their actions.
The diligent investor is the enemy of the fraudulent broker. Careful recordkeeping is the best protection against fraud.
Investors should obtain statements from all firms that service their accounts and read them carefully. FINRA advises that statements may have subtle telltale signs that they have been doctored to conceal fraud.
Account statements often are the best tool investors can use to detect and stop potential broker fraud. Brokerage account statements provide invaluable information, including account numbers, broker and clearing firm contact information, and a summary of investment holdings. If you see anything that looks suspicious on your account statements, do not ignore it. Ask your broker or the brokerage firm about it; if you do not get a satisfactory answer, consider contacting a broker fraud attorney.
Specific red flags of broker fraud identified by FINRA include:
- Inconsistent end dates and statement periods, or no end date or statement period listed
- Account numbers that change suddenly, or assets that are suddenly missing
- Incorrect address and account information, or incorrect ownership information.
- Improper or completely missing disclosures
- Phone numbers that are disconnected, always busy or never answered
- Unknown brokers listed, no clearing firm information provided, and unknown dividend or interest income sources
- Unrealistic account performance, such as always reporting gains
- Excessive or strange fees, or unauthorized transactions listed.
ENSURING ACCURACY IS KEY TO DETECTING FRAUD
The value of investments made via brokers and brokerages are tallied at the end of each statement period and mailed to respective account holders. If a change in your account numbers or other standardized information suddenly occurs, FINRA advises contacting your brokerage firm right away to correct any issues. If the faulty information continues, broker fraud might be the problem.
Brokerage firms hold investors’ securities, and account statements must contain their contact information. Account statements also include account performance, such as income, dividends, deposits, withdrawals, and maturity dates for bonds. Following them closely helps investors track their money and locate potential issues that might indicate broker or brokerage fraud.
Monthly statements also should include portfolio details that outline individual assets that comprise the account. Portfolio details often include breakdowns of investments by asset class, bond insurance ratings, yield, and unrealized gains and losses. The monthly statements should enable investors to ensure the investments made are in accordance with their goals.
Disclosures and definitions also are critically important elements of investor statements. They define and disclose the various codes and terms used in statements and help investors understand the information provided. The information should include explanations of various types of investment accounts. Any detailed or revised information should include definitions, explanations, and other pertinent data.
The bottom line is that as an investor, you should pay careful attention to your statements. Many people never look at their statements, or they only read the summary page. If you see a trade you did not authorize or another discrepancy, it could be a sign of fraud, or it could simply be a mistake. But you can help prevent yourself from being a victim by calling the issue to the attention of your brokerage house. If the answers you get are not satisfactory, talk to our broker fraud attorney.