Misrepresentations. False statements. Incompetence by stock brokers and financial planners. Investor fraud and broker misconduct are more common than you may think. The U.S. is experiencing an epidemic of fraud among corporate and financial executives, and large investment firms. Loosely translated, securities fraud is stealing, and federal officials estimate that investment fraud costs U.S. taxpayers billions of dollars each year.
Backed by experience, our lawyers aggressively pursue arbitration between consumers and broker-dealers (e.g., stock brokers, investment advisors or financial planners).Contact us immediately if you suffer loss of your savings due to one of the following common forms of stock broker fraud or misconduct, because you may have a right to recover losses:
- Churning or excessive trading: Excessive trading in a customer’s account to give profit to the broker/dealer in disregard of the customer’s best interests. Prosecutable under the 1934 Securities Exchange Act.
- Unsuitable investments: Investments that ask the client to assume a greater financial risk than he or she can reasonably sustain; investments that are inconsistent with the clients financial needs; or investments in which the client is not adequately made aware of the risks involved.
- Insider trading: Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include “tipping” such information, securities trading by the person “tipped,” and securities trading by those who misappropriate such information.
- Misrepresentation and false statements: Disguises risk factors associated with that particular stock; the broker intentionally misleads the customer about material facts regarding the stock.
- Unauthorized trades: Unless the client of a brokerage firm has signed a contract that allows his or her broker to engage in discretionary trading, each transaction performed by the broker must be done with the client’s permission.
- Breach of fiduciary duty: A breach of fiduciary duty includes, among other things, abdication of duty, abuse of trust and approval of unlawful transactions, and may be based on nonfeasance as well as misfeasance.
- Overconcentration: Diversification is one of the most important rules of investing. Brokers should never concentrate all of a client’s investments in one area. The broker who does so is potentially liable if that investment declines in value.
If you have been victimized by stock fraud, you may be eligible for compensation as well as damages through legal action. Where there is a choice between arbitration and a lawsuit, arbitration can have significant advantages. Simplified procedures, such as the lack of formal pleading rules, the absence of most pretrial motions, and simplified discovery can substantially reduce the cost of obtaining a decision.
Most brokerage firms now require their customers to sign arbitration agreements when they open an account. These agreements are generally enforceable, so if you have signed one, you probably don’t have a choice and will be required to arbitrate your claims even though, for technical reasons, sometimes a lawyer will choose to file your case in court first before it is ordered to arbitration. If there is no arbitration agreement, and your claims are against a stockbroker, the rules of the National Association of Securities Dealers and applicable law give you a choice between arbitration and court.
Most arbitrations are conducted by the National Association of Securities Dealers, Inc. (NASD) and the New York Stock Exchange (NYSE). There is little difference between the two, but an attorney can help you decide which scenario works more to your advantage.
The arbitration process can take from six months to a year from the time of filing to completion, and consists of the following phases:
- A Statement of Claim is filed with the NASD or the NYSE, setting forth the claims one (the Claimant) has against the broker and/or brokerage firm (the Respondents).
- A response, provided by the broker and/or firm.
- Discovery, in which both sides may request documents deemed relevant to the dispute.
- The hearing, where the parties present their respective sides of the dispute to the arbitration panel. The panel is usually composed of three individuals, two of whom are public arbitrators not affiliated with the securities industry and one who is affiliated.
- Determination by the panel whether the Claimant should be reimbursed for the losses sustained and/or recover additional damages.
If you have been victimized by stock fraud, please contact us online or call 800-434-8399.We can review your case and determine the course of action that will assure that you are compensated for the damages that you have suffered.