3 Warnings Signs of Stockbroker Fraud

Representing Investors Nationwide

Man Writing and Engaging in Stockbroker Fraud

If you’ve seen “The Wolf of Wall Street” or followed the Bernie Madoff Ponzi Scheme, you may have an idea of what stockbroker or investment fraud looks like. In reality, most stockbrokers are honest, hardworking people doing their best to help you grow your money. Sometimes, though, you may find yourself in a situation where something feels off about your broker’s actions. These three warning signs can help you detect stockbroker fraud and protect your assets.

1. Your Stockbroker Makes Wild Claims

It’s illegal for stockbrokers to have insider information, but that doesn’t stop some from claiming they do. Stockbrokers will use that and other tactics to push their clients toward risky investments that will benefit the stockbroker and their firm more than you. Be wary of the following statements:

  • “It’s the next big thing!”
  • “This is a hot stock – you better act now!”
  • “It’s worth borrowing money to invest in this one – your return will be huge!”
  • “You’re guaranteed a high return on this one!”

Watch out for a stock broker who claims that a new stock will be extremely lucrative. A good investment will still be a good investment in the future, and you shouldn’t need to take swift action in order to get a decent return.

A solid investment portfolio is created by measured decisions that increase your return over time. While there are some exceptions, a stock broker using exaggerated language to nudge you toward immediate investments may be engaging in fraud.   

2. Your Stockbroker Pushes You to Invest

Your stockbroker is bound by fiduciary duty, meaning they’re charged with putting your interests first. This means that your stockbroker should take the time to understand the following about you before making recommendations or trades on your behalf.

  • Risk tolerance
  • Investment experience
  • Financial needs and goals
  • Income streams

If your stockbroker wants to make moves that don’t align with your circumstances, they’re not only untrustworthy; they are at risk of investment fraud.

3. Your Stockbroker Ignores Your Wishes

While you may have given a stockbroker the authority to act on your behalf, their actions should fall in line with your goals and risk appetite as discussed above. If you notice excessive trades or an overconcentration of assets in a certain stock or industry, this constitutes as stockbroker fraud.

If you’re someone who’s more involved in your investment portfolio, you’re not immune to fraud. Some brokers will fail to execute your orders or fail to do so in a timely manner, both of which are illegal. If a stockbroker is persuading you to authorize certain trades by misrepresenting or omitting facts, you may also be the victim of fraud.

Is It Fraud?

If you’ve lost money at the hands of a stockbroker or investment firm, you may not necessarily be a victim of fraud. However, if something seems fishy about your financial portfolio or stockbroker’s actions, you shouldn’t have to simply cash out and move on.

Stockbrokers are bound by professional guidelines and security laws that give you certain rights. While taking a deeper dive into your account can be a good first step, an experienced investment fraud lawyer can help get your money back.

Contact a Stockbroker Fraud Attorney Today

If you or a loved one believe you’re the victim of stockbroker fraud, call 855-456-0066 for a complimentary case evaluation. The Orlando attorneys at Colling Gilbert Wright & Carter help clients nationwide determine if they have a case and how to fight back.