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What is Stockbroker Fraud?

What is Stockbroker Fraud?

Orlando attorney explains signs of stockbroker fraud The stock market is a complex industry that very few people have mastered over the years. Investing is a constant gamble, which is why so many people trust their hard-earned money to stockbrokers who will play the investment game for them. Unfortunately, many stockbrokers don’t have your best interests in mind and may mismanage your funds, leaving you and your family in a financial bind.

When you decide to invest in the stock market, you should do your homework on the various brokerage companies available to use, so you don’t fall victim to stockbroker fraud.

What is Stockbroker Fraud?

Stockbroker fraud, or investment fraud, happens when your stockbroker comes to you and offers recommendations that are inaccurate and designed to help them more than you and your family. A lie by omission is still a lie, so when your stockbroker fails to list the associated risks of a particular stock, they are committing fraud by leaving out pertinent information or offering inaccurate details. They may provide outlandish promises such as doubling your investment overnight.

Other forms of stockbroker fraud include:

  • Failure to deliver or accurately deliver executive orders on your funds.
  • Executing excessive trading practices, referred to as “churning.”
  • Unauthorized trades using your funds.
  • Over-concentrating of stocks such as investing too large of a percentage in a single sector, market, or company. A diversified portfolio is essential to stock market success.
  • Poor recommendations based on false statements or corporate misrepresentation. 
  • Breach of fiduciary duty, which occurs when a stockbroker fails to take your financial stability, associated risks, tax obligations, goals, and other facets into account when managing your investments.

If you suspect stockbroker fraud, it’s essential to get in touch with an attorney who specializes in this legal area as soon as possible. Our Orlando attorneys can answer your stockbroker fraud questions and help you seek compensation.

Signs of Stockbroker Fraud

When you decide to make a significant investment with a stockbroker, you need to research the individual and their company, especially to make sure they have the appropriate training and credentials to trade on your behalf. Some of the biggest indicators of stock market fraud include:

  • Statements such as “You can make a lot with little to no risk.” The returns you get on your investments are directly related to the associated risks. High-risk stock exchanges can provide a high return, but it’s more of a gamble than going for lower stocks with a smaller return. A stockbroker who makes this promise is likely mismanaging your funds and putting you at substantial financial risk.
  • “Insider Information.” Not only is this practice of trading stocks illegal but the “hot tip” could be false and cause you a loss.
  • Limited time offers. Deciding what areas and stocks to invest in is a complicated process that requires time to ensure it’s the right move. Don’t let a stockbroker railroad you into making a quick decision because of a limited time offer.

Meet with a Stockbroker Fraud Attorney in Orlando

If you’ve been a victim of stockbroker fraud, please contact our attorneys in Orlando today at (407) 712-7300 for a FREE case evaluation. Colling Gilbert Wright & Carter serve clients in Orlando, Florida and nationwide.