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What Are the Most Common Types of Broker Fraud or Negligence?

Stock broker fraud can take many forms. Whether it is churning, misrepresentation or unauthorized trading, the common denominator among all forms of broker fraud is this: The broker put their own interests ahead of the customer’s interest.

Six leading types of broker fraud are:

  • Unsuitable investments. A 90-year-old person should not be purchasing stock futures. A retiree on a fixed income should not heavily invest in equities. A young person just entering the workforce should not have a portfolio heavily invested in low-return, low-risk investment products. All of the foregoing scenarios describe investments that are not suitable given the investor’s age and risk tolerance.
  • Misrepresentations or omissions. A stock broker who misrepresents the facts surrounding a proposed investment, or omits facts the investor is entitled to know, has deprived the customer of a fair opportunity to consider the investment. A stock broker must disclose all of the material facts regarding an investment — including the commission the stock broker will receive upon sale.
  • Unauthorized trading. A stock broker may not trade on the customer’s account without the customer’s express permission.
  • Churning. Churning occurs when a stock broker buys and sells the same investment over and over again, or frequently switches between investment products for no good reason.
  • Unlicensed or unregistered. All stock brokers and their firms must be licensed to sell securities. Also, every securities investment product must be registered before it can be offered for sale.
  • Negligence. Not all instances of stock broker misconduct are intentional. In some cases, investors can suffer losses due to broker carelessness. Losses due to broker failures to disclose material information, failures to learn about the customer’s needs and risk tolerance, are all compensable even if caused unintentionally by broker negligence.

Investors who suffer losses as a result of any of these fraudulent or negligent activities are entitled to financial compensation. Complaints can be directed to the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission and the Florida Office of Financial Regulation (Florida residents only). Defrauded investors should additionally retain the services of an experienced broker fraud attorney to help recoup their losses.

Now is the time to talk to an investment loss recovery lawyer. We can help recover your investment loss. Free consultations, always.

Main Office - Fort Lauderdale

1250 S. Pine Island Road
Suite 325
Plantation, FL 33324
Phone: (866) 330-5167
(954)-406-1231

We represent clients nationwide, including, but not limited to: Miami, Boca Raton, West Palm Beach, Sarasota, Tampa, Stuart, St. Petersburg, Vero Beach, Orlando, Jacksonville, Austin, Houston, Dallas, Washington DC, Charlotte, Boston, Baltimore, Phoenix, Scottsdale, Las Vegas, Los Angeles, San Diego, San Francisco, Chicago, Seattle, Portland, Denver, Salt Lake City, Fargo, Atlanta, Little Rock, Newark and St. Louis

Additional Office Locations (by appointment only)

Atlanta

3355 Lenox Road
Suite 7
Atlanta, GA 30326

Indianapolis

13295 N. Illinois St.
Suite 314
Indianapolis, IN 46032

New York City

275 Madison Avenue
Suite 705
New York, NY 10016

Dallas

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Suite 400
Dallas, TX 75201

Irvine

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Suite 1700
Irvine, CA 92612

Portland

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Suite 205
Portland, OR 97220

Denver

7900 E. Union Ave.
Suite 1100
Denver, CO 80237

Naperville

1700 Park Street
Suite 103
Naperville, IL 60563

Seattle

1001 Fourth Ave.
#3200
Seattle, WA 98154

We represent clients nationwide, including, but not limited to: Miami, Boca Raton, West Palm Beach, Sarasota, Tampa, Stuart, St. Petersburg, Vero Beach, Orlando, Jacksonville, Austin, Houston, Dallas, Washington DC, Charlotte, Boston, Baltimore, Phoenix, Scottsdale, Las Vegas, Los Angeles, San Diego, San Francisco, Chicago, Seattle, Portland, Denver, Salt Lake City, Fargo, Atlanta, Little Rock, Newark and St. Louis