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The Most Common Forms of Stockbroker Misconduct

Although stock losses are part of the risk of being an investor, you should never have to deal with losses caused by the actions of your stockbroker. Unfortunately, broker misconduct is far more common than you might think, and there are countless ways brokers have taken advantage of their clients.

Continue reading to learn more about a few common types of stockbroker misconduct: misrepresentation, unauthorized trading, and unsuitability. This way, you have a better idea of what signs to look out for and how to tell whether you have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration complaint.


If you work with a registered stockbroker, they have a fiduciary duty to always act in your best interests. When an investor fails to provide you with material information, or manipulated material information in some way that has an influence on your decision to invest, they could face misrepresentation allegations.

Unauthorized Trading

If you have a discretionary account with your financial institution, you have given your broker authorization to make trades without first getting permission. But if you have a non-discretionary account and your broker is making trades without your consent, they can be accused of unauthorized trading. If proven, the FINRA arbitrators can require that they compensate you for your stock losses.


Remember when we mentioned fiduciary duty above? This also applies when making investment recommendations to an investor. The broker must do their research and make suggestions that align with the goals of the investor’s portfolio.

However, if the broker does not do their due diligence, misleads an investor about an opportunity, or otherwise makes unsuitable recommendations, FINRA arbitrators may award a wronged investor full restitution.

Contact a Stockbroker Misconduct Lawyer

You can learn more about what your legal options for financial recovery are by reaching out to a reputable stockbroker misconduct lawyer at Wolper Law Firm. Schedule your free consultation by completing the quick contact form below or calling our office at 800.931.8452.

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