What is Stockbroker Fraud?
What many trusting investors don’t realize is that not all stock losses are caused by fluctuations in the stock market or because the investment itself was a poor choice. Sadly, one common way investors lose money is their stockbroker’s fraudulent actions.
There are many different ways that brokers, and the financial institutions that employ them, can take advantage of investors for their own financial gain. Read on to learn more about some common types of stockbroker fraud and what you should do if you have suffered considerable losses on the stock market that you believe may have been due to misconduct.
Stockbroker fraud is increasingly common as the markets become more volatile. Investors are looking for those things that can give them above-average returns. They want to keep up with their friends, neighbors, and relatives who are bragging about the huge profits they are making in the markets. This encourages fraud by preying on investors who want to make more.
These investors understand the risks and are willing to take them to see the larger rewards. The problem is that fraud destroys this natural ambition and innovation. Many are no longer as trusting and lose that sense of optimism about the future. This makes it harder for legitimate investment opportunities to be given the proper attention. These investors are skeptical about new ideas or taking any risks.
Fraudsters like investors who are willing to take a risk and have a hands-off approach. This is what makes it easy for fraud to occur.
The Wolper Law Firm can help if you feel you are the victim of stockbroker fraud. We are the stockbroker fraud attorneys that are on your side, and we will stand up for you. Contact us today at 954.406.1231 / 800.931.8452 and get your free consultation. We will identify and go after those that are responsible for committing fraud.
Common Stockbroker Fraud Schemes
The complexity of the financial markets helps brokers disguise your losses as unavoidable risks you took by investing. In reality, the broker is defrauding you. Below are several types of schemes our stockbroker fraud lawyers regularly see.
- Making unsuitable investment recommendations – Your broker has an obligation to make recommendations that align with your investment objectives and risk tolerance. Any investment opportunity that does not help you achieve your goals or is outside of stated risk parameters, and results in substantial losses, could be considered an unsuitable investment.
- Failure to diversify – A lack of portfolio diversification is one of the worst mistakes a stockbroker can make. You’ve heard the phrase “don’t put all of your eggs in one basket.” Lack of diversification is an over-concentration of your investment portfolio in one area. It’s very risky, in light of the volatility of the financial markets.
- Failure to supervise – You should be able to trust that your brokerage firm or financial institution is monitoring their staff for fraud, given how frequently it occurs within the industry.
- Selling away – Selling away occurs when a broker sells securities to a client that have not been approved by the brokerage firm. Often, when a broker is selling away, he or she is selling private securities offerings in which he or she has a personal, vested interest. Selling away can lead to devastating investment losses because the securities are not properly vetted and are, in most cases, speculative and not suitable for the typical investor.
- Unauthorized trading – If you don’t have a discretionary account and your broker executed transactions in your account without your permission, they can be held accountable for unauthorized trading.
- Excessive trading (churning) – Churning, or making an excessive number of trades in an investor’s account, generates high commissions for the broker and can cause massive investment losses.
- Misrepresentation or omission – In an attempt to influence your decision to invest, a broker may leave out pertinent information or mislead you about the opportunity.
- Negligent portfolio management – You turn to a stockbroker because they are supposed to be the experts who understand the markets. But when the professional you trusted is careless or incompetent in managing your portfolio and you suffer large losses, they may be held responsible for their negligence.
These are just a few of the most common types of stockbroker misconduct. While many stockbrokers are honest individuals, there are also a significant number who are not. If you have encountered a dishonest stockbroker who has taken advantage and cost you significant losses, you may be entitled to compensation to recover your money.
Speak with our stockbroker fraud attorneys to discuss the individual details of your case and learn what legal options are available to you. We provide free consultations in a friendly, low-pressure environment.
What Helps Fraudsters the Most?
The biggest thing that enables any fraud is the trust of the victims. They believe what they are told and are excited about the fictitious benefits they will receive. This gullibility is what helps them focus on everything they are told by the fraudster.
Fraudsters are looking for specific people and attributes, including . . .
- The elderly: Senior citizens are the most vulnerable. They are dealing with things like end-of-life issues, their legacy, physical, and mental health issues. This means that they are susceptible to fraud.
- The uninformed: Lots of investors don’t know how to make their money grow. They are relying on the knowledge and advice of financial professionals. Fraudsters will impersonate these professionals. These investors don’t see what is happening until it is too late. The fraudsters will take as much as they can from the victims until they are broke or the scam is discovered.
- Silence: Silence is one of the things that will allow any fraud to continue. Fraudsters are relying on you to not tell anyone about what happened and hope you will feel ashamed. This decreases the odds of your speaking out and identifying those involved. The moment you speak out is when the fraudsters become nervous. They know what they did was wrong and that swift action is coming soon. Fraudsters want victims that will remain silent and never say anything.
These are some of the things fraudsters look for in their victims. If you are the victim of fraud, contact us immediately at 954.406.1231 / 800.931.8452. We are the stockbroker fraud lawyers that can tell you what is happening and hold the fraudsters accountable. We have a 99% success rate for our clients and will go over your options during the free consultation.
What To Do If You’re a Victim of Stockbroker Fraud
If you have been a victim of stockbroker fraud, there are several options you may have to seek recovery of your investment losses. The option most commonly chosen by wronged investors is arbitration with the Financial Industry Regulatory Authority (FINRA), or you may be able to sue the stockbroker and their brokerage firm in court. In some situations, negotiating a settlement through mediation may be an option if both sides agree to it. When you work with our stockbroker fraud attorneys, our team will explain the legal options to recover your loses and will be alongside you at every step in the process.
Recover Your Stock Losses in FINRA Arbitration
FINRA is the organization that oversees the conduct of registered stockbrokers and brokerage firms. If FINRA agrees to hear your case in arbitration, you’ll have the chance to hold your stockbroker accountable for their actions. You may recover some or all of the losses you suffered and potentially be additionally compensated for the impact the loss has had on your life.
Our Stockbroker Fraud Lawyer Explains the Process
Here are some basics about how the arbitration process through FINRA works. Arbitration is mandatory among all brokerage firms and financial advisors registered with FINRA. Arbitration is similar to a civil trial, except that you go before an arbitrator or arbitrators instead of a judge or jury. If you’ve lost less than $100,000, your case will come before a one-panel arbitrator. If your losses exceed $100,000, three arbitrators will hear your case and decide the outcome. During arbitration, you and your attorney will present evidence to the arbitrators, as will the respondent, who is the person and/or firm you are making the claim against. The arbitrators will review all the evidence and make a decision.
One thing to point out is that FINRA arbitration decisions are binding, so you cannot appeal them. However, if you win your arbitration case, your broker will be required to repay you for some or all of your stock losses within 30 days of the arbitration decision.
As set forth in FINRA Rule 12206, you have a maximum of six years from the date that the event or occurrence giving rise to the claim (i.e., the stockbroker fraud) occurred to initiate an arbitration claim. For this reason, it is critical that you keep close watch on your accounts for any unusual activities and contact our stockbroker fraud lawyers as soon as you notice any inconsistencies. Don’t risk running out of time to initiate a complaint. Contact our attorneys today.
Reasons to Work with a Stockbroker Fraud Attorney
Sometimes wronged investors wonder if they even need an attorney to go through FINRA arbitration. They may reason that they are already out a lot of money because of the fraud, so why should they give more to an attorney? While you are not required to hire a lawyer, it is to your benefit to do so; here’s why:
- Securities fraud is a very complex area of the law. Attorneys who understand how to bring these types of claims will know how and where to investigate for evidence in order to prove fraud to the arbitrators.
- You can be sure that the stockbroker and brokerage company you have filed a claim against will have their own skillful attorneys there representing them.
- Our stockbroker fraud attorneys work on a contingency basis, so we get paid only if we get you recovery.
Why Choose Us?
The Wolper Law Firm was founded by Matt Wolper. He is a stockbroker fraud lawyer practicing in securities law for 25 years. Matt has worked with some of the big Wall Street firms for 14 years. He started our firm to help investors.
His knowledge and experience are what allow him to identify fraud and create a plan to hold the fraudsters responsible. We have a 99% success rate and are dedicated to helping you take action.Contact the Wolper Law Firm now at 954.406.1231 / 800.931.8452 and speak with a stockbroker fraud attorney. We will go over your case and let you know what options are available during the free consultation.
Resolving Your Stockbroker Fraud Complaint in a Lawsuit
Suing in court is another possible option for wronged investors in the event an arbitration agreement does not exist. In some cases, such as if your stockbroker is unregistered, you may not be able to use the FINRA arbitration process. On the other hand, many investors sign arbitration agreements when they hire a brokerage firm, which limits them from bringing legal claims in court.
When you go to court, both sides will present their evidence just as they would in arbitration; when all the proceedings are complete, the court will make a ruling in the case. You could be awarded your money and additional compensation, depending on the circumstances, or the ruling could go against you. If you don’t win in trial court, you may be able to appeal to a higher court. Of course, if the ruling goes against the broker and brokerage firm you are suing, they can also appeal the case, which will further delay your getting compensation for your losses.
Once we learn about your situation, our stockbroker fraud lawyers will advise you about the appropriate legal avenue in your case. Our hardworking litigators are always ready, willing and able to take cases through the trial phase. And we don’t back down in the face of fraud that affects the financial well-being of clients and their families.
Mediation and Settlement Negotiations in Stock Fraud Cases
Whether your claim goes to arbitration or to court, a settlement attempt may be made at some point in the process using mediation. Mediation is when a trained and neutral third party seeks to help disputing sides come to an amicable settlement. FINRA offers mediation as an alternative dispute resolution process before going to arbitration or during the arbitration proceedings. Mediation to try and resolve disputes and reach settlements outside of trial may be ordered by a judge. If your claim goes to mediation, we can help you try to come to a fair resolution in settlement negotiations.
If you are interested in learning more about what legal options are available to you after suffering devastating investment losses, reach out to a dedicated investment fraud lawyer at Wolper Law Firm. Call 855.294.1672 or complete the contact form below to schedule your free case review. We understand how difficult it is for you and your family to lose your retirement or other savings to fraud. We will fight for your rights and interests throughout the legal process.
Turn to Our Stockbroker Fraud Attorney. We Are Committed to Helping You Get Recovery When Your Financial Well-Being Is at Stake.
Frequently Asked Questions About Stockbroker Fraud
Get Answers from Our Stockbroker Fraud Lawyers
Stockbroker fraud is confusing. It can be hard to believe that the person you hired to protect and grow your retirement savings or other investment is actually cheating you out of your money in order to enrich themselves. When you’ve been the victim of a dishonest stockbroker, you probably have many questions about the situation and your legal options.
Our stockbroker fraud attorneys address here some of the most common questions we get from wronged investors. For answers to your individual questions and concerns, reach out to our law firm today.
Is stock fraud a felony? The answer to this question is yes, it can be. Stock fraud, which is considered a “white collar” crime, may be prosecuted either as a felony or a misdemeanor, depending upon all the circumstances involved. Stock fraud is often prosecuted as a federal crime, but it may also be prosecuted at the state level or at both the state and federal levels. People convicted of stock fraud may lose their broker license, pay civil penalties and hefty fines, and be sentenced to prison time in criminal cases. Under 18 U.S. Code Section 1348, people who commit criminal securities fraud may spend up to 25 years in prison for a single charge.
There isn’t a single agency that investigates fraud in the stock market. The U.S. Securities and Exchange Commission, which is the federal agency regulating the industry, investigates cases of stock fraud and may work with the Federal Bureau of Investigation (FBI) in criminal cases of stock fraud. State agencies also investigate stock fraud. FINRA’s Enforcement Department investigates alleged stock fraud and takes disciplinary actions against stockbrokers and brokerage firms that are determined to have committed fraud.
When you believe your broker has committed fraud against you and cost you substantial money, we can help you determine what steps to take to potentially recoup your losses and hold the broker and their firm accountable. Call Wolper Law Firm today to speak with an experienced stockbroker fraud lawyer by dialing 855.294.1672.
If you’ve already been defrauded by your broker, you can prevent future fraud by holding them accountable through FINRA arbitration or a lawsuit. If you aren’t sure whether fraud is taking place and want to prevent it from happening, there are several things you can do, starting with regular review of your account statements. People who don’t pay careful attention to their statements are most often the investors who are victims of fraud. Look for frequent activity or activity that you haven’t approved in a non-discretionary account.
Pay attention for red flags during interactions with your broker. Do they offer you low-risk, high-reward investments that seem too good to be true? Do you feel as if they are trying to rush or pressure you into investing in a particular stock or mutual fund? Or is the investment they are presenting to you so complicated that you can’t understand it? These can all be signs that your broker is acting fraudulently.
When you are looking for a new stockbroker and brokerage firm, you can get licensing and other background information by visiting FINRA BrokerCheck and the U.S. Securities and Exchange Commission website.
Proving broker and brokerage fraud is a very complex undertaking. The brokerage firm will have legal counsel representing them who are highly knowledgeable about stock market investing and highly experienced at defending brokerage companies from fraud accusations. To have the best chance of success, you will need your own well-versed stockbroker fraud attorneys on your side. Our team will identify and gather the evidence to build the strongest case possible.
Speak With Our Well-Qualified Stockbroker Fraud Attorneys. We Are Standing by to Provide a Free, No-Obligation Consultation.
Although you may feel overwhelmed at the thought of pursuing arbitration or other legal action, unless you do so you may not stand a chance to ever recover your investment losses, which may greatly affect your retirement or other future plans and goals. When you work with Wolper Law Firm, our responsive stockbroker fraud attorneys will seek to make the process as low stress for you as possible. We will provide one-on-one guidance and be at your side to guide and represent you throughout the proceedings.
Your initial consultation is free; and if we don’t win your case, you pay nothing, because our stockbroker fraud attorney works on a contingency basis. Give us a call today at 855.294.1672 to learn how we can help you.