Know the Red Flags of Stockbroker Fraud
Most people define a stockbroker as a skilled professional who guards your money, cares for your money, and helps the money you entrusted to grow continuously. Those who participate in stocks know that the amount of money they have invested goes up and down.
According to Investopedia, a stockbroker is a person called an agent who works independently or in a firm and buys and sells stocks for their clients. A stockbroker charges a fee or receives a commission from these clients.
Unfortunately, not all stockbrokers are honest or trustworthy and commit fraud against those clients who put their trust in their stockbrokers.
Are there Fraudulent Stockbroker Firms?
Not only are there too many unscrupulous stockbrokers, but too many stockbroker firms operate illegally and commit fraud on their clients. Fraud happens when these firms recommend specific investments due to secretive high commissions from the ones issuing the stocks.
Some stockbroker firms push these bad investments on their brokers to sell due to their attractive commissions. Some stockbroker firms know that their brokers are not trustworthy in handling a client’s investment, but supervision is lacking since the broker is making substantial earnings.
Stockbroker fraud is committed for one reason only; lucrative commissions.
How Can You Know if Your Stockbroker is Defrauding You?
If you are a resident of Plantation, FL, or live in the surrounding areas, our esteemed and seasoned attorneys help individuals who are victims of stockbroker fraud.
Perhaps you do not know for sure but suspect something is amiss with your investment portfolio. If you wonder if your stockbroker is mishandling your account, please call us immediately so we can help you.
It would be wise to always keep a close eye on your investment accounts and transactions. However, you must be increasingly vigilant of your accounts if you suspect stockbroker fraud. Keeping a close eye on your accounts may prevent you from losing money.
There are some red flags to be aware of if you suspect stockbroker fraud, and they are as follows.
- Unauthorized transactions in any of your accounts are a crucial factor if something is wrong.
- Do you see a transaction that you do not understand?
- Do you notice a generalized decline in your account?
- Do you notice that one product is making up your investment portfolio?
- Do you see a decline in the value of your account?
- When you ask your stockbroker for little investment risk and see massive gains or losses, there may be fraud.
- Do you see little to no returns on investments when these investments showed prior high gains?
- Do you see an increase in trade confirmations?
- Are there large securities purchased on margin?
- Unusual, sudden, and significant changes in your investment portfolio could signal fraud.
Give your stockbroker time to explain the unusual activity you noticed on your account, as they may have an honest explanation. If they have no explanation or are vague to your questions, this may be enough to suspect fraud, and you should be concerned.
Fighting stockbroker fraud is complicated. It is best to speak with a stockbroker fraud attorney and seek legal help. This particular attorney, skilled in stockbroker fraud, is necessary if you want a successful outcome for your case.
Digging Deeper into Stockbroker Fraud
If you know anything about investing in stocks, you know that the stock market always goes up and down. Not all stock losses are related to fluctuations in the market. You may have made an unwise choice of stocks.
An investor’s fraudulent actions are the only way investment clients lose money. The sorry truth is that too many brokers and financial institutions take advantage of investors for their financial gain.
But also, a tremendous number of stockbrokers are diligent, work hard, and do all they can to assure their clients that they do not lose their hard-earned money.
Untrustworthy Stockbrokers and Their Fraudulent Schemes
The Responsibility of Stockbroker Firms
- When you build your portfolio through an experienced brokerage firm, you trust that this firm knows how to handle your money, and you hire a stockbroker firm to make you money, not lose all you invest.
- You trust that the stockbroker firm you hire will not commit fraud with your funds. You trust that your broker is watching your investments and making them work for you.
- You also trust that the firm is keeping a watchful eye on its brokers who could commit fraud. Otherwise, that firm is negligent in its supervision of its brokers.
- There are far too many times that a stockbroker may make unauthorized transactions on your behalf. This action is called unauthorized trading and can cost you dearly. Firms should be vigilant about this fact.
- Stockbroker firms must approve securities they sell to their clients. Is your stockbroker selling securities not approved by their firm? Securities not closely vetted by the firm are not suitable for the investor.
Usually, when this happens, the broker has a vested interest in these private securities. These actions on the part of your broker can cause substantial investment losses and are not following their firm’s policy.
- Firms should know if their brokers are negligent in managing a client’s portfolio. You trust the investment firm you choose to work with because you believe that firm and its brokers to be expert financial professionals.
Natural and Expected Investment Risks
You are taking a risk when you start investing in the stock market, which is why there are stockbrokers to help guide your financial future. A stockbroker not working in your best interest may be untrustworthy or inexperienced in the investment field.
Stockbrokers Who Hide Losses
The stock market is massively complex, and within this complexity, a criminal stockbroker can disguise losses by saying the loss was unavoidable. Investors certainly know that when you play the stock market, you take a risk with your money. It is easy for them to risk someone else’s money.
Suitable Investments Must Align with Client Goals
Your stockbroker has an obligation to you to make sure that suitable investments are made that follow your financial goals. If the stock broker’s investments with your money do not seem to meet your goals, the risks they run of losing your money may be considered unsuitable investments on your behalf.
To Err is Human. However —
Stockbrokers are human; thus, they are subject to making errors, sometimes. However, experienced stockbrokers know they must not lack the ability to diversify your investments. When stockbrokers do not diversify investments, they are grossly negligent with your account.
Investing money in one area of the stock market is never a good thing and poses a significant risk for you. Your broker needs to spread your money into a diverse amount of investments that they know will show success for you financially.
Excessive Trades
Every time your broker invests in stock for you, they earn a commission. Each trade they make is how they get paid. An untrustworthy broker sometimes makes excessive investments through numerous trades, paying them a higher commission and costing you a massive loss.
Intentional Misleading Stockbroker Information Happens
Perhaps you believe that your broker is constantly communicating with you and is always seeking your authorization. Be aware of your stockbroker trying to influence the decisions you make. Be on your guard to the possibility that they may leave out information you need to know. Is your stockbroker possibly misleading you?
Practice Stockbroker Fraud Prevention
You undoubtedly worked many years and saved up a sizeable amount of money that you believe can grow to your retirement advantage if you correctly invest your money, so you hire a stockbroker firm to make winning investments for you.
It is not hard or time-consuming to check your choice of stockbroker firms and individual stockbrokers first. This step can save you from future heartache, headache, and wallet pain.
The question is,
“How do you know a stockbroker firm and their stockbrokers are good?”
Before trusting your money to someone you do not know, check to make sure the stockbroker firm and their stockbrokers have a solid positive working relationship with someone you know well.
Can that person offer you a stunning reference?
Is that firm and their brokers are licensed in your state, do some checking.
Check to see if they have had a negative impact on regulators and if they have severe complaints from investors. You can check the FINRA (Financial Industry Regulatory Authority) website for more information or call their number at 1-800-289-999.
Are You a Victim of Stockbroker Fraud?
Expert or professional, some brokers are naturally incompetent and careless in managing money for other people and should not be in the industry. This action constitutes gross neglect, and you can hold them accountable. This Plantation, FL, stockbroker fraud lawyer wants to help you.
If you believe this happened to you, call us immediately because you deserve compensation for your loss. Never allow a negligent stockbroker to walk away Scott-free because they will continue to do the same thing to another client.
We have several options that you can take to get your hard-earned money back. We can guide and direct you and will remain at your side for as long as you need us. We want to help you.
If you believe you are a victim of stockbroker fraud, call us immediately. Please tell us the details, and we will tell you the options you have to recoup your losses. Please realize that there are honest, upstanding stockbrokers. However, many stockbrokers are not trustworthy enough to handle your investments and help you secure your financial future.
There is no obligation when you call us for the first time, and we never charge for this initial consultation. We want to hear the facts of what happened to you so we can tell you if you have a case.
We charge you no fee for services unless we win your case, and we have a fantastic winning track record against the stockbroker industry, which causes fraud against unsuspecting clients. We protect your rights to fair compensation.
