Most Common Investor Claims Against Bad Brokers
Securities fraud is happening more and more frequently now, especially as the Internet’s popularity as a medium to buy and sell stocks continues to skyrocket. Dealing with people’s retirement is serious business and is no easy task. Stockbrokers, financial advisors, mutual fund managers and money managers are expected to adhere to good ethics and the law when making financial decisions for their clients. If you have been taken advantage of by your broker and have had your money actually stolen by a financial advisor, there is legal action you can take to get your money back.
Incompetent or shady money managers are typically accused of six “categories” of wrongdoings:
• Bad recommendations or investments
• Misrepresentations and omissions
• Churning (excessive trading)
• Investing without authorization
• Not following client’s instructions
• Misappropriation of funds
Many times, unsuitable recommendations for investments are made. A misrepresentation is simply a lie and an omission is not telling the client pertinent information. Often, these cases arise in the context of boiler room operations, from which teams of brokers make a large volume of cold calls using high pressure sales tactics. Such boiler room brokers often falsely claim that they know what price a stock is going to go to, that their firm controls the price of the stock, that they have inside information from the company, that profits are certain, or that they are selling you stock from a hot public offering.
Misleading omissions can be just as actionable as affirmative lies as, for example, when a telephone broker tells you that a company has billions of barrels of proven oil reserves without telling you that those reserves cannot be recovered economically.
Churning (excessive trading) occurs when a broker who has authority over an account engages in excessive trading in order to generate large commissions.
Another common claim is that a broker will make unauthorized trades on behalf of his client. Often, the broker simply fails to consult a client before making trades in an account. Sometimes, the broker may buy stocks on margin without authority or simply ignore a client’s specific instructions about buying and selling.
Failing to follow a client’s instructions happens a great deal as does misappropriation of a client’s funds. This often occurs in situations where the broker is not reporting a particular transaction to his employer.
If you feel you have been a victim of stockbroker fraud and you live in Beaumont, Texas or the Golden Triangle area, please visit the website of the securities litigation attorneys at The Coffman Law Firm today.
Article Source: ArticlesBase.com - Most Common Investor Claims Against Bad Brokers