Investment fraud and Stock broker negligence

Stock market investors understand that risk and reward go hand in hand. That is legitimate losses can occur at any given moment, well it is normal business is a world of risk and courage to play the game of luck… but losing your hard-earned money due to stockbroker fraud or negligence is unacceptable. If you believe your stockbroker has misled you or suffered losses due to unauthorized trading, churning, mutual fund or bond switching, or from being placed in investments that were unsuitable for you, the clock is ticking against the amount of time you have to file a claim.

Avoiding from such kind of fraud and negligence is a must for every corporation to reflect on the issue to circumvent a big loss to the corporation. Careful assessment to your stock broker would be of great help in avoiding losses and end up for nothing. The truth is that stockbrokers are not even required to hold a college degree in order to embark on a career making investment recommendations to the general public. They are also not required to meet minimum net worth requirements just to satisfy any sort of residency or internship periods, or even to exhibit actual firsthand experience investing their own money before going to work to invest yours.

Stockbrokers are primarily compensated on a “transactional” basis, meaning that they are only paid when buying or selling stocks for their clients. This is the fundamental conflict between the financial objective of the client and the financial objective of the broker. Problem arises when brokers engages in trades solely for the purpose of generating commission. In many cases brokers will liquidate positions at a very small profit in order to cover the commission involved. The client is then contacted and encouraged to trade again, repeating the process over and over until the majority of their funds are eventually lost to losing trades that should never have been placed to begin with.

Another thing is when the broker enacted purchases or sells in an account that the client did not approve prior to execution. Even in some extreme cases, brokers actually take measures to gain possession of their client’s funds, instructing them to write checks to inappropriate parties, wiring funds from their account or transferring their stocks into other brokerage accounts. The term fraud can also encompass activities such as creating bogus account statements, crossing stock positions between clients and accepting cash incentives from clients for placing “hot issue” IPO stock into their accounts.

Investors can incur losses as they pursue above-average returns in the stock and bond markets. Most of these losses are can be attributed to forces such as poor timing and adverse market conditions, but in some cases it is the investment broker who is at fault. If you believe you have experienced losses due to the negligence of your broker, you may wish to take action to recover your money. If you are unsure if your broker is at fault you may wish to speak with experienced legal counsel in order to analyze the trading activity of your account and the investment advice provided to you your broker.

Always remember prevention is better that cure!