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THE SIMPLE FACTSTM...Stockbrokers, registered investment advisers and financial planners are required by law to deal with their clients with the utmost integrity. This means that they have a duty - fiduciary duty - to put the client's interests ahead of their interests.
If the stockbroker or investment adviser breaches that fiduciary duty and causes you injury, you may have a stock fraud claim and may be able to recover damages for any losses caused by the stockbroker’s misconduct.
The federal and state securities laws protect investors from securities and stockbroker fraud, and the laws may apply to many financial instruments.
A broker or investment advisor should:
- manage accounts in a manner directly in line with the needs and objectives of the customer
- act responsively and keep clients up to date on each completed transaction
- explain the impact and potential risks of the recommended trading strategy.
A securities fraud claim may include one of the following:
- Breach of Fiduciary Duty/Negligence
- Churning/Excessive trades and Unauthorized Stock Trade
- Failure to Execute Securities Orders
- Failure to Supervise Stockbrokers
- Misstatements and Material Omissions
- Unsuitable Securities Claims
Breach of Fiduciary Duty
Securities brokers and investment advisors are fiduciaries that owe their customers a duty of loyalty and care. If the broker breaches this duty, he/she may violate the law.
Churning/Excessive trades and Unauthorized Stock Trade
Churning occurs when your broker convinces you to make multiple trades in your account or recommends that you swap or flip products such as annuities or mutual funds, which are typically long-term investments, that is not in your best interest. Churning is a fraudulent scheme designed to generate more commissions.
If the broker excessively churns a customer's account, he/she may violate the law.
Failure to Execute Securities Orders
Your broker is allowed “a reasonable time” to execute your securities orders. If trades are not executed in a timely manner and you lost significant value during the delay or or you were talked out of making specific trades, you may have a claim.
If the broker repeatedly fails to execute securities orders, he/she may violate the law.
Failure to Supervise Stockbrokers
All FINRA member firms and managers within those firms are obligated to supervise their stockbrokers and to review statements for potential problems, including churning.
If the brokerage fails to properly supervise its brokers, it may violate the law.
Misstatements and Omissions
This is usually characterized as a material misstatement of fact as well as the failure to disclose a material fact in connection with the purchase or sale of securities.
If the broker makes misstatements or material omissions, he/she may violate the law.
Unsuitable Securities Claims
The suitable securities idea is probably the cornerstone in the stockbrokers manual. A stockbroker is required to make appropriate or suitable recommendations to their customers based on their tolerance for risk and investment objectives. A suitable recommendation is drawn from a variety of client factors: income, net worth, age, investment objectives, risk tolerance and other factors.
One way a stockbroker may violate the rule of suitability is if he/she fails to properly properly diversify your investment portfolio or concentrates too much of your portfolio in risky/volatile securities.
Quite frankly, the simple factsTM about securities and stockbroker fraud and the various ways a stockbroker may injure investors are unacceptable.
If you have been harmed by stockbroker or investment fraud, please fill out the case evaluation form on this website or call our office.
In addition, an MDL has been setup in the Northern District of Texas for Stanford Entities Securities Litigation (IN RE: Stanford Entities Securities Litigation Litigation No. 2099).
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