The Most Common Types of Stock Fraud
Stock fraud appears in a lot of different forms on Wall Street, and there’s an infinite number of dishonest schemes which have yet to be imagined. However, the vast majority of fraudulent scams appear again and again.
It is absolutely vital that American consumers know the difference between their money being stolen and their investments declining as a natural part of unfavorable market conditions. That’s because many of the biggest brokerage firms on Wall Street are masters at covering up stock fraud by convincing investors that their losses only happened because of a downturn in the economy.
These cons are incredibly easy for an experienced stock fraud attorney to identify. An accountant may also be able to recognize the problem. Even a sophisticated investor may be able to pinpoint the inappropriate actions occurring in your account.
For laypersons, on the other hand, stock fraud isn’t always so apparent, aside from a ‘feeling’ that something is wrong, or a suspicion that the massive financial losses in their accounts just don’t make sense.
The Many Faces Of Stock Fraud
Here are the legal issues involved in the most common types of stock fraud claims:
Unsuitability: When a stockbroker or brokerage firm recommends an investment or an investment strategy that is completely inappropriate and/or overly risky for your investment goals and needs.
Omissions/Misrepresentations: When a stockbroker or brokerage firm lies to you or withholds information from you when recommending that you buy a particular investment. In other words, had you known the withheld or misrepresented information it would have caused you to reconsider buying the investment?
Breach of Fiduciary Duty: When a stockbroker or brokerage firm places its own interests and needs in front of your own. In other words, you were harmed so that the brokerage firm or stockbroker could benefit financially.
Churning: When a stockbroker or brokerage firm makes numerous useless and/or harmful transactions inside your account for the sole purpose of generating commissions and fees.
Overconcentration: When a stockbroker or brokerage firm fails to diversify your account and invests an inappropriately large percentage of your money into one investment, one type of investment, or one sector of the economy.
Failure to Supervise: When a brokerage firm fails to supervise and does not put an immediate stop to the fraudulent actions of an employee.
At the end of the day, if you suspect that anything is amiss in your accounts, do not hesitate to seek the wise counsel of one or all of the following:
- An experienced stock fraud attorney
- A certified public accountant
- A knowledgeable friend or confidant
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If you have been injured by stock fraud, you have been wronged and you deserve justice.
For a free and totally confidential consultation, contact the Consumer Investor Resource Center today.