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Do You Have a Case Against Your Stock Broker? 10 ways to Tell



I have a lawyer friend, who represents specific investors from around the Country in claims versus their stock brokers, I hear a wide range of problems about brokers' fraud and misbehaviour. If you believe that your broker has actually abused or hurt you, you may wish to think about whether your complaint falls within any of the following typical grievance classifications. If you fall into one of these categories, you may have a meritorious grievance against your broker.

Here are some standards to think about whether you have a case:

1- Unsuitable Investments-- If you inform your broker that you are a "conservative" financier with a "low" danger tolerance and you are taken into, for example, risky high innovation stocks.

2- Unauthorized Trades-- If you see that sells and buys are occurring in your account without your previous approval or knowledge or any contact from your broker, these trades are "unauthorized".

3- Risk Profile Change-- If you see that the "investment objective" or "threat profile" ("aggressive" "moderate" or "conservative") on your regular monthly account statements has altered, without your input, from, for instance, "moderate" to "aggressive". A "warning" needs to go up if you get documents from your broker which do not reflect your investment goal (aggressive, moderate, conservative).

4- Fraudulent Stock Research-- If you purchased stocks relying on stock research study which was identified by the SEC and New York Attorney General to be "fraudulent" (Infospace, ICGE, WorldCom, etc).

5- Churning-- If your broker is excessively trading or constantly turning over your account, for the purpose of creating sales commissions.

6- Fraudulent Statement of Risk-- If you have actually suffered significant losses in your account and your broker informed you that you had a "low threat" portfolio.

7- Over-concentration- If your account is over-concentrated in stocks and equity shared funds which are primarily high innovation or telecom, you have an over-concentrated portfolio. If your broker has actually not designated your properties into different classes (stocks, bonds, cash) or diversified your stocks and equity mutual funds into various industry "sectors".

8- Excessive Use of "Margin"-- If your broker purchases stock with "margin" loanings which you did not license.

9- "Activity" Letters-- If your brokerage company sends you an "activity" letter recommending you of large losses, turnover, high commissions, high margin levels, and so on in your account and this is not consistent with your instructions to the broker.

10- Mutual Fund "Switching"-- If your broker encourages you to get out of one shared fund or "variable annuity" and into another. Frequently brokers are "pressing" mutual funds which are "proprietary" and which may provide the broker higher compensation and are not always in the client's best interest.


As a lawyer who represents private financiers from around the Country in claims versus their stock brokers, I hear a broad variety of problems about brokers' scams and misconduct. If you think that your broker has actually abused or harmed you, you may want to think about whether your problem falls within any of the following common grievance classifications. If you fall into one of these categories, you may have a meritorious problem against your broker.

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