How to Prove Broker Fraud
Being able to prove that your stockbroker has engaged in misconduct is essential if you hope to recover the considerable losses you endured due to their fraudulent handling of your investments.
But, doing so could prove to be a challenge if you don’t know what acts are considered fraud and how to prove it. For this reason, we have provided information below regarding some of the most common types of stockbroker misconduct and how you can prove broker misconduct in FINRA arbitration.
Is Your Broker Defrauding You?
Losing money when investing shouldn’t be a surprise, but you can recover your stock losses only when you can prove that your broker has defrauded you. But proving broker misconduct isn’t easy—it requires a keen eye for numbers and the law.
Stockbroker fraud can take many forms, but some of the most common include:
- Excessive trading on margin
- Unauthorized trading
- Failure to supervise
- Lack of diversification
- Ponzi schemes
The good news is that if your stockbroker has been putting their financial interests above yours, proving it should be fairly simple. Schemes like these almost always leave a paper trail. If you have kept track of your investment portfolio, transactions, and other important financial documents, there should be evidence that your broker has defrauded you.
But, if you are still unsure whether you have been a victim of stockbroker or financial advisor misconduct, take a closer look at your accounts. Are there unexplained gains or losses, excessive transactions (more than four per year), unauthorized trades, losses where similar investments have seen gains? If so, you may have been taken advantage of by your broker.
Holding Unscrupulous Brokers Accountable in FINRA Arbitration
The Financial Industry Regulatory Authority (FINRA) takes broker fraud very seriously and allows wronged investors to initiate complaints against brokers. Doing so will open up the opportunity to be awarded repayment of your stock losses if you can prove to the arbitrators that you have been a victim of broker fraud.
You will be able to present evidence, with the assistance of your attorney, during your FINRA arbitration hearing. The amount of your losses will determine whether your case is heard by a single arbitrator (losses less than $100,000) or a panel of three arbitrators (losses in excess of $100,000).
The broker and possibly their brokerage firm can then refute your claims and try to explain how the losses you suffered were reasonable and not due to broker fraud. Once both parties have presented their case, the arbitrators will review the evidence and determine whether you should be awarded compensation for broker fraud.
Contact an Experienced Broker Misconduct Lawyer
If you need help proving that your financial advisor or stockbroker defrauded you but you aren’t sure where to turn, reach out to a respected broker misconduct lawyer at Wolper Law Firm.
Our firm is proud to offer complimentary consultations to investors who have been cheated by their brokers. You can take advantage of this opportunity by giving our office a call at 800-931-8452 or submitting the convenient contact form below.
- Former West Park Capital, Inc. and Laidlaw & Company LTD Broker, Bryan Mazliach, Investigated By FINRA For Alleged Violation Of FINRA Rules
- Former BMO Harris Financial Advisors, Inc. Broker, Lori Ann Sacco, Suspended Six Months By FINRA For Allegedly Altering Customer Account Documents
- Former Woodbury Financial Services, Inc. Broker, Jodie Lane, Suspended Six Months By FINRA For Allegedly Accepting Gifts And Becoming Beneficiary Of A Client
- Broker, Kimberley Schkade-Hill, Supsended by FINRA For Four Months And Fined $10,000 For Allegedly Having Clients Sign Documents In Blank
- LPL Financial LLC Broker, Matthew Clason, Is The Subject Of An SEC Enforcement Action For Allegedly Stealing Hundreds Of Thousands Of Dollars From A Client
- Former Capitol Securities Management Inc. Broker, Michael Rubel, Suspended By FINRA For 45 Days For Allegedly Engaging In Short-term Trading Of Unit Investment Trusts
- Recovering Your Investment Losses In Non-Traded Real Estate Investment Trusts And Business Development Companies
- Former Westpark Capital, Inc. Broker, Hary Datys, Suspended By FINRA For Fifteen Months For Allegedly Failing To Conduct Due Diligence Before Selling Promissory Notes
- Former Ameriprise Financial Services, LLC Advisor, Arthur Hoffman, Barred By FINRA For Allegedly Failing To Provide Documents In Relation To Investigation Into Outside Business Activities
- Crown Capital Securities Broker, Kenneth Barroga, Has Had Four Customer Complaint Disclosures