Failure to Execute means that a customer gave their stockbroker or investment professional a specific order to sell a specific security, at times at a specific price as well.
When you ask your broker to execute an order, he or she is required to do so within a reasonable time. It is rare for such an order to be ignored, and brokers have little incentive to do so. Particularly with newer technologies that automate the process, a failure to execute an order isn’t a frequent occurrence. However, mistakes are still made from time to time, and clients can suffer serious losses as a result.
Reasons Stockbrokers Fail to Execute Orders
Even in cases in which a broker fails to execute an order, it can often be difficult to prove especially if the order was conveyed verbally and not followed up with a written order. For this reason, it is important that you always maintain a paper trail by issuing written orders, even after confirming your request verbally with your broker.
Infrequently, too, a broker may disagree with your requests and may advise you against a specific order. In some cases, misunderstandings between you and your broker may result in your broker failing to execute an order that you believed would be made. In other cases, your broker or brokerage may fail to inform you that a planned or expected trade did not occur.
However, not all failures to execute claims are based on mistakes and misunderstandings. Occasionally, a broker will simply refuse to make a requested trade. In selected cases, a broker may legally refuse an opening order-a purchase order or a short sale, but brokers are prohibited from refusing a close order to close a short position.
If you or someone close to you has had your stockbroker illegally fail to execute an order on your behalf, you may still have recourse, and you may be able to recover any losses you’ve incurred. The first step in determining whether you have a valid failure to execute claim is to consult with an experienced lawyer who represents securities fraud victims. The first consultation is free, and if you do have a securities fraud claim, we’ll fight to get your money back.
Company Stock Fraud
Adelphia is a cable communications company that was quickly expanding until alleged securities fraud prompted bankruptcy in June 2002. Adelphia was run by members of the Rigas family and several other top executives who have since been charged with securities fraud among other criminal and civil offenses. Adelphia is accused of reporting higher earnings and more subscribers than the company actually had, failing to report debts accurately, and hiding the personal purchases, loans, and illegal deals made by the Rigases.
The former energy company was undone by accounting fraud and off-the-balance-sheet transactions. Enron’s accounting firm, Arthur Anderson, LLP, has already been convicted of obstruction of justice because the firm allegedly destroyed documents pertinent to the Enron case.
Global Crossing Fraud
Telecommunications company Global Crossing, which maintains a worldwide fiber optic network, filed for bankruptcy in 2001. Founder and CEO Gary Winnick resigned a year later amid allegations of securities fraud. Winnick himself is suspected of using insider information to sell his stocks for over $120 million several months before the company’s bankruptcy. Several lawsuits have already been filed against Global Crossing.
Info Space Fraud
InfoSpace is a wireless telecommunications company, whose founder and the company are both facing securities fraud. Jain allegedly hired new, qualified employees, offering them stock options as part of their benefits package. The catch was that they had to be employed by InfoSpace for at least one year or they would lose their stock. The employees were fired before the year was up. The firm has settled with several of its former employees, paying millions of dollars to each. In addition to these charges, Jain is accused of using insider information to sell over $400 million in stock before the telecom industry bust.
Between 1999 and 2000, iVillage stock price fell drastically. Despite the hard times, a Merrill Lynch analyst continued to rate iVillage stock as a buy. It is thought that his positive assessment of the deteriorating stock had more to do with Merrill Lynch’s interest in retaining its investment banking relationship with iVillage than with the stock’s actual potential.
In July 2002, major accounting errors that hid vast amounts of debt preceded WorldCom’s bankruptcy. The telecommunications giant faced increasing problems up to that point, but investors were unaware of the company’s impending demise because of the accounting gaffes and intentional cover-ups. Some former top executives of WorldCom have been accused of altering transaction and account records to conceal company debt; several have admitted wrongdoing thus far.
Contact our variable annuities fraud lawyers today for your free case evaluation.