Stockbroker Misconduct

Stock brokers and other investment professionals have a duty to place their clients' interests above their own and those of their employers. Most investment losses are due to market forces, but when stockbrokers and other licensed financial experts fail in their fiduciary duties, investor's rights may have been violated. This could subject these legal professionals to legal claims.

Most claims against stockbrokers, investment advisors, and financial planners fall into the following categories:

• Misrepresentation - omissions of, or false statements regarding critical investment information that may include price predictions, guaranties, and other "special" information pertaining to a particular investment. In certain instances, misrepresentation can rise to the level of fraud.
• Excessive trading - also known as churning, is when a stockbroker buys and sells stocks to generate commissions for himself and for his firm. Investors should look out for aggressive trades in which there are no meaningful price changes of the securities being traded.
• Misappropriation - also known as "selling away", it occurs when a stockbroker fails to report a transaction to his or her employer. The brokerage firm may be held accountable even if it is not aware of the customer or transaction involved.
• Unauthorized or inappropriate investments - usually discovered when an investor reviews his or her account statement and finds trades that were not discussed, authorized, or are in excess of the agreed purchase price or number of shares.

Other of the more common types of stockbroker misconduct include suitability (of recommended stocks for the investor), margin account fraud, variable annuity fraud, economic suicide (failure to warn of overly risky investments), failure to execute, failure to supervise, and sale of unregistered securities. In many of these types of stockbroker misconduct, the broker's firm may also be responsible for damages.

Victims of stockbroker misconduct and fraud may be entitled to recover their investment losses and additional compensation. If you suspect that you've been taken advantage of by an unscrupulous financial investment professional, you may wish to consult with a qualified attorney who specializes in this area of the law.

To learn more about what constitutes stockbroker fraud or misconduct, visit www.sec.gov.