Investor fraud and broker negligence happen when a stockbroker or brokerage firm purposefully defrauds you or accidentally neglects to give your investment accounts the diligence and service required by law.
American consumers trust Wall Street brokerage firms to safeguard billions of dollars of personal assets. In most circumstances, investors receive the best professional services available, but when greed, dishonesty, and broker negligence are thrown into the mix, innocent consumers can lose their life savings in a heartbeat.
Broker negligence and investor fraud claims typically involve a combination of multiple violations. The most common are:
- 401(k) Mismanagement: Financial losses, fraud, and negligence relating to the management of your 401(k) retirement accounts.
- Breach of Fiduciary Duty: When stockbrokers or brokerage firms harm you knowingly, in order to benefit themselves.
- Breach of Promise/Contract: Any action that violates the contract between you and your brokerage firm, or a violation of the contract between your brokerage firm and The Financial Industry Regulatory Authority (FINRA) of which you’re a third party beneficiary.
- Churning: When a stockbroker or brokerage firm recommends or makes a transaction for the sole purpose of generating commissions and fees to the detriment of the customer. Typically churning involves large numbers of transactions causing an investor to pay exorbitant and pointless fees.
- Failure to Supervise: A brokerage firm’s failure to supervise and prevent fraudulent and/or negligent actions committed by your stockbroker.
- Misrepresentation and Omission: When an investment firm or stockbroker lies, misrepresents or omits the truth from you, typically regarding the risks associated with an investment, or some other harmful or negative aspect of an investment.
- Overcharging: When a security is offered and sold to an investor at an inflated price that does not reflect the true market price (usually the stockbroker or investment firm will keep the difference).
- Overconcentration: When your portfolio is concentrated in one or a few investments, one classification or type of investment (like stocks), or one sector of the economy.
- Negligence: When a stockbroker or brokerage firm ‘drops the ball’ on your investment accounts and fails to give you the services you deserve, and you lose money as a result.
- Selling Away: When a stockbroker sells you a security that has not been approved for sale by his brokerage firm.
- Unsuitability: When an investment advisor or brokerage firm recommends or purchases investments for you that do not fit your needs, goals, and objectives.
Broker Negligence: Did You Know?
- According to a recent study by MetLife, an estimated $2.9 billion is stolen from the elderly every year through financial fraud, which represents an increase of 12% from 2008.
- In 2011, approximately 4,700 investors filed arbitration claims against their stockbrokers and/or brokerage firms through the Financial Industry Regulatory Authority (FINRA).
- In 2012, approximately 45% of FINRA cases that went to trial received a favorable award for damages.
Compensation is Available
Millions of investors are harmed by broker negligence and Wall Street fraud every single year. However, most defrauded investors don’t take action to get their money back. As a result, corrupt and negligent banks, brokerage firms and stockbrokers continue to steal and cause financial damages to consumers without facing justice.
If you are a victim of investment fraud, you deserve compensation, and the Consumer Investor Resource Center wants to help you get it. Investors who lost money due to stock fraud may be eligible to receive payment for multiple types of compensation, including:
- Investment losses
- Attorney’s fees and legal costs
- Punitive damages
No matter your age, retirement status, nationality, or the state in which you reside, help is available. For a free and totally confidential consultation, contact the Consumer Investor Resource Center now. Let us help you win the compensation you deserve.