Investment Fraud Attorney
Stock Broker & Investment Fraud
An investment fraud attorney handles misrepresentations regarding investments, from stockbrokers, who are compensated either by commissions generated from transactions or on a fee basis charged as a percentage of the amount invested. Investment advisors are typically compensated on a fee basis but can earn commissions as well. While most financial professionals are honest and competent, the securities industry offers plenty of opportunities to defraud clients of potentially substantial amounts of money.
Fraud is a serious crime that can subject the perpetrator to regulatory sanctions, civil liability, restitutions and criminal prosecution. Just because you’ve lost money in the financial markets does not necessarily mean you’ve been defrauded.
Investments come with risks. Even well-established corporations have ups and downs in business which, in turn, affects the value of its stock and bond prices. Numerous factors affect the price of stocks and bonds, including company-specific issues, industry trends, and overall market performances. Sometimes brokers and advisors give bad advice with no intent to defraud. However, if you have lost money because your broker or advisor has misrepresented the nature and risks of an investment, has traded excessively in order to generate unwanted commissions (churning), traded your investments without your approval (unauthorized trading) or has placed too much money in one or a small number of securities (overconcentration), it may be time to consult an experienced securities attorney, Florida.
Stockbroker and Investment Advisors Duty to Clients
Different people have different investment needs. When you open an account, your financial professional has an obligation to “know the customer”, including your financial goals and risk tolerance in order to make suitable investments.
While investment objectives and risk factors are subjective to each investor, if your financial professional fails to recommend the right type of securities to match your specific circumstances, you may have a basis to recover your losses and contact a financial fraud lawyer.
Types of Stock Fraud Include
There are as many fraudulent schemes and many greedy and unethical brokers. Some types of stock broker fraud which occur in the security industry include:
- Misrepresenting (including omitting) the nature and risks of an investment in order to induce a customer into making inappropriate investments. This could mean misstating or omitting “material” information about the company being recommended, the sales commission for an investment, the risks involved in the investment, the liquidity of the investment, and so forth.
- Recommending investments not suited to your stated objectives and risk tolerance. For example, if you tell your financial professional that you are a widow needing to generate income from conservative investment to preserve your limited wealth, and your broker pushes you into investing in a portfolio un unduly high-risk investments, you are very likely the victim of fraud.
- Overconcentration of your investment portfolio in one or a small number of securities, industries, market sectors or products which subject your money to unnecessary risk, as opposed to diversifying your portfolio.
- Unauthorized trading or making trades in your account without your express permission.
- Churning your account for the purpose of generating commissions for the broker or investment advisor with little or no benefit to the customer.
- Failing to execute your order in a timely manner. While a broker/investment advisor may decline to execute an order under certain circumstances, if the broker/investment advisor accepts your order they must execute it without delay.
- Depositing clients funds in the broker’s own account.
- Selling away – Selling you an investment that is not vetted, approved, supervised or often even known to the brokerage firm at the time of the sale.
- Sale of unregistered securities or engaging in the sale of securities without a license. There are two requirements necessary in order to sell securities. The individual engaging in that activity must be licensed in a manner that permits the sale of that particular security or product. In addition, the security must be properly registered or subject to an exemption from registration. In most instances, the private sale of securities (those not tracked on an exchange) is limited to “accredited investors.”
Getting the Legal Help you Need When You’ve Been Defrauded
If your investment account contains securities or activity which you do not recognize or did not authorize, you may have cause to believe that your account is being traded improperly. Your course of action is to consult an experienced attorney. You may be able to recover all or part of the money you have lost.
To learn whether you have been the subject of securities fraud, Todd A. Zuckerbrod, P.A. has over 30 years of experience in all aspects of the securities industry. Arrange your free consultation to discuss your situation by calling his Boca Raton office today.