Fraudulent Practices

Signs of stockbroker fraud and misconduct are often not evident until it is too late and you've lost thousands of dollars of your hard earned money. However, if you act quickly and talk to a recovery expert, you may be able to recover your stock market losses.

If you invest in stocks, bonds, variable annuities, limited partnerships, mutual funds, certain commodities, and you have experienced problems or unexpected losses, you may be a victim of investment broker fraud.

We help you recover your investment losses caused by broker violations relating to fraud.


Fraud, unauthorized claims, churning, suitability, broker/dealer liability, international claims, failure to disclose, failure to supervise, false statements, misrepresentations, omissions, pyramid or ponzi schemes, false trades, delayed executions, improper sellouts, incorrect trades, overconcentration, unethical practices.

While no one expects stockbrokers or financial advisors to have a crystal ball, stockbrokers and financial advisors are required to make only suitable investment recommendations to their customers. Unfortunately, too many stockbrokers and financial planners make overly risky investment recommendations to their clients that result in substantial investment losses.

  • Stockbroker fraud and misconduct

Stockbroker fraud and misconduct is all too common. Investors put their complete trust in stockbrokers or financial advisors, only to see their money disappear due to bad advice. Stockbroker fraud and misconduct may involve the act of misleading an investor or purposefully providing incorrect advice in order to profit from a client's investment decision. Securities stockbroker fraud can include excessively trading your account, false statements, misrepresentations, concealment of information, or intentional misuse of investor trust. When information is tainted, investors cannot fairly weigh the risks versus the opportunities, and are more likely to lose money.

Stockbrokers and other financial experts are held to a high standard of honesty and fairness. When a person who is licensed to buy and sell securities takes advantage of his position and fails to provide reliable and complete information to a client, the investor's rights have been violated.

Victims of stockbroker fraud and misconduct may be entitled to recover their stock market losses from the broker or the broker's employer, plus additional compensation.

  • Unsuitable Recommendations

Unsuitability refers to an investment advisor's failure to make recommendations based on a client's individual needs, goals and willingness to incur risk. Brokers have a legal duty to thoroughly assess the needs of their clients, and then make appropriate and fair recommendations. Stock market loss as a result of unsuitability is one of the most common investment claims.

A broker must determine the customer's financial condition, level of knowledge and experience, investment objectives, risk tolerance, age, income, spending needs, and only recommend investments that are appropriate for the customer's circumstances. What is a suitable investment for a successful doctor will likely be grossly unsuitable for a retired widow living on a pension.

For example, in one of our cases, a broker recommended investing the majority of a retired widow's life savings in high risk tech stocks and the widow lost over $200,000. We filed suit claiming that the broker violated his duty to recommend suitable investments. The case quickly settled for a very sizable amount.

  • False Statements, Misrepresentations, or Omissions

A broker may induce a customer to buy or sell a stock by making statements or representations of facts that are known by the broker to be untrue, and are relied upon by the customer following the broker's recommendation.

Also, a broker can commit fraud by an "omission" -- failing to reveal important facts that would have been important to the customer in making the investment decision. Sometimes the broker will falsely state, "I have an inside tip" or "You should buy this stock - I know I am buying it." For example in one of our cases a broker guaranteed our client against loss in a variable annuity.

However, our client lost almost $250,000. We settled this case for a substantial sum of money.

  • Pyramid or Ponzi Schemes

Pyramid schemes, also known as "Ponzi Schemes," rely on investors to contribute an initial investment, usually promising a high interest rate. In reality, the interest is paid from funds contributed by new investors.

The cycle continues creating a large tier of investors who are supposedly all profiting. Eventually new investors cannot be found and the ponzi scheme collapses. Ponzi schemes are built up around false promises and a system that only rewards the schemer.

We have recovered very large sums of money from the brokerage firms who employed the brokers running the Ponzi schemes.

  • Breach of Fiduciary Duty

In simple terms, a fiduciary duty is defined as, "An obligation to act in the best interest of another party." When one person undertakes to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter.

The client is entitled to the best efforts of the fiduciary on his behalf and the fiduciary must exercise all of the skill and diligence at his disposal when acting on behalf of the client.

Courts across the country have expressly held that a fiduciary duty exists between a stockbroker and his customer.

  • If your stockbroker recommends investments inconsistent with your financial goals and expressed risk desires, you may be the victim of stockbroker fraud or misconduct.
  • If your advisor fails to disclose important details about an investment, you may be the victim of stockbroker fraud or misconduct.
  • If your stockbroker recommends a dramatic change in your investment strategy, you may be the victim of stockbroker fraud or misconduct.
  • If your stockbroker traded on your account without your knowledge or authorization, you may be the victim of stockbroker fraud or misconduct.
  • If your stockbroker conducted excessive trades in your account, you may be the victim of stockbroker fraud or misconduct.
  • If your stockbroker guarantees that an investment is a "sure thing," you may be the victim of stockbroker fraud or misconduct.
  • If your statements contain transactions that you do not recognize or understand, you may be the victim of stockbroker fraud or misconduct.
  • If your stocks recommended by your broker are substantially declining in value, you may be the victim of stockbroker fraud or misconduct.

Your broker is required to perform adequate diligence and determine if your investment is suitable for you. Unfortunately, many brokers fail to do so.