Stock Broker Misconduct in 2020: What You Need to Know

Investing in stocks always carries a certain amount of risk. After all, the market can be volatile and you never know how things will unfold. Another crucial factor is the stock broker you are working with. Unfortunately, recent years have seen a rise in stock broker misconduct.

Your stock broker could be your greatest ally, but they could also pose the biggest threat to your money. Their advice can be invaluable, but if they do not follow the best practices and standards, you might lose significant amounts of money.

Today, we will take a look at the most common types of stock broker misconduct. All of the cases outlined below justify holding the broker responsible by initiating legal proceedings against them. If you find yourself in such a situation, we advise you to seek the help of a stock broker misconduct lawyer.

What Is Stock Broker Misconduct?

The Financial Industry Regulatory Authority is the main body that deals with rules and standards for brokers. Failure to meet the FINRA standards makes a broker liable for damages. If improper actions are revealed, your stock broker misconduct lawyer can sue and attempt to recover investment losses.

Stock broker misconduct can range from mere negligence to downright fraud. So, let’s take a look at some actions that can get a stock broker accused of misconduct.

Unauthorized Trading

Usually, brokers are not allowed to make moves without your approval. If you have not given them authority, it is  illegal for them to make decisions on their own. This type of misconduct does not usually involve fraud, but it can result in financial losses for you.

If your broker has been making transactions without your approval, you need to talk to your stock broker misconduct attorney.

Unsuitable Investments

While a certain investment might be a great idea for some, it might also hold many risks for others. Stock brokers must have a deep understanding of their clients’ needs, and not push unsuitable investments on them. Some of the factors that a stock broker must consider are:

  • Age and financial status
  • Financial and investment experience
  • Retirement goals
  • Tax status
  • Risk tolerance
  • Other investments

FINRA Rule 2111 regulates the “suitability” of investments. If you lose money as a result of an unsuitable investment, your stock broker misconduct lawyers have a full basis to file a claim. This type of stock broker misconduct is perhaps the single most common type you need to watch out for.

Excessive Trading

If your broker gets paid in the form of fees for each executed transaction, they might feel compelled to make a lot of them. However, the law requires brokers to have a sound reason for every trade they make. Excessive trading can result in increased fees, which will end up eating away at your profit margins. If a broker frequently makes trades with the aim to collect more fees, you are looking at serious misconduct.

This practice is also known as “churning” and makes the broker liable for misconduct charges. A good stock broker misconduct law firm will be able to help you press the charges and get the compensation you deserve.

Omission of Facts

Brokers must present you with full and accurate information on any investment moves you are considering. However, they might lie to you or omit key facts that can influence your actions. Lack of proper data in broker reports can result in you making a bad investment. In such cases, you have every right to hold the broker accountable.

If such actions have resulted in a loss for you, you might also be eligible for compensation. Consult with your stock broker misconduct attorneys on what the best course of action is.

Criminal Activity

Indeed, some brokers are known to engage in actual criminal acts in order to steal your money. Selling investments that do not exist or not reporting their moves to the firm they work for are common schemes that fraudulent brokers execute. More often than not, the victims of such schemes are vulnerable targets, such as the elderly.

Fraud, forgery, and theft are serious crimes and can cost you a lot of money. If you suspect that your broker might be engaging in criminal activity, contact your stock broker fraud misconduct lawyers.

When to Contact a Stock Broker Misconduct Lawyer

If you want to protect yourself from stock broker misconduct, you need to always be careful. Make sure you review your broker’s activity and recommendations. Also, make it a point to always ask for detailed information on everything. Even if you’ve never had problems with the broker in question, you never know what might be happening behind your back.

If you suspect that your broker is not being honest or is making moves behind your back, you need to be proactive. Contact a stock broker fraud misconduct lawyer and have them look at the situation. They might end up saving you a lot of money.

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