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Signs of Stockbroker Fraud | Colling Gilbert Wright and Carter

Common Warning Signs of Stockbroker Fraud

When you entrust your money to a stockbroker, you expect a high level of professionalism, honesty, and trust. After all, you’re taking finances you’ve worked hard to accumulate and placing it in the hands of an individual whose job is to manage it on your behalf. 

But what happens when a stockbroker acts negligently or purposefully engages in misconduct with your money?

At Colling Gilbert Wright & Carter, our stockbroker fraud attorneys have more than 80 years of collective professional legal experience helping individuals who’ve been the victim of investment fraud. We’ve handled both individual and class action suits. We understand how serious this type of fraud can be on the livelihood of you and your family. We are committed to fighting aggressively on your behalf to hold the responsible party liable and get your money back.

What Is Stockbroker Fraud?

Stockbroker fraud, also known as investment fraud, occurs when stockbrokers mismanage your funds or make financial decisions that benefit the broker more than they benefit the client. Any actions that are taken by the stockbroker that benefit the broker most, are harmful to the client, are unapproved or excessive, can be considered stockbroker fraud. These types of fraud may be difficult to detect for some time.

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.

Stockbroker fraud can be devastating to your finances and can leave you feeling betrayed and unsure of what to do next. While not every trade recommendation that results in a stock market loss equals stockbroker misconduct or fraud, there are some clear behaviors that can be attributed to misconduct.

Different types of stockbroker fraud include:

  • Misrepresentations and omissions: When stockbrokers intentionally leave out information or give misleading information to their clients which leads to them making unwise or uninformed decisions
  • Unauthorized trading: When a stockbroker makes a trade on your account without your explicit permission.
  • Overconcentration: When stockbrokers invest too heavily in one company or market which can have devastating impacts on a client
  • Excessive trading: When stockbrokers continue to excessively buy and sell stocks that hold little or no benefit to the client but greatly benefits the broker by increasing their profits
  • Breach of fiduciary duty: When a stockbroker makes any number of decisions that do not put the welfare of your finances above all else when making those decisions

Investment fraud carries heavy consequences, especially if you fail to realize you’re being used by the broker. When you choose a stockbroker, it’s vital to your account and livelihood that you do your due diligence and research the individual and entire investment company to make sure they make your money work for you and not the other way around.

What Are the Common Signs Of Stockbroker Fraud?

Choosing to invest a substantial amount of money in the stock market through a stockbroker is a big decision and one that shouldn’t be done lightly. There are many investment firms in Florida and across the nation, and not every broker has your best interest in mind. 

Our attorneys specialize in stock market fraud because we know how devastating a significant loss in your investments can be. Your investment account could be your retirement plan or your nest egg to pay for college someday, so when you suspect you’ve been the victim of stockbroker fraud, it’s essential to contact an experienced attorney to handle your claim before you suffer even more financial losses.

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 stockbroker 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 stockbroker 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 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.

Contact a Stockbroker Fraud Attorney Today

If you believe you’ve been the victim of stockbroker misconduct or fraud, contact us today online or at (800) 766-1000 to schedule a free consultation. We will help establish if you have a claim and fight to recover what you’re owed. We proudly represent clients in Orlando, FL and nationwide.