As a national securities litigation law firm and investor protection advocate, the firm sees all types of securities fraud. The firm has put together a top 10 list of the most common types of securities fraud to come through the firm’s offices.
#10 – Insider Trading
– Brokers sometimes recommend trades claiming that they have insider information. Insider trading is illegal and an investor should not invest based on their advisor’s “insider information.”
# 9 – Guaranteed Winner
– Brokers are generally not permitted to make guarantees regarding performance of an investment. If your broker has done so, it is likely against his or her firm’s policy.
#8 – Trading Without Permission (Unauthorized Trading)
– Unless your account is setup as a discretionary account (permitting your broker to trade without your prior authorization), a financial advisor is required to call you before every trade.
#7 – Misrepresentations
– Brokers often misrepresent the safety or features of a product. If you were induced to purchase an investment based on misrepresentations, the advisor may be liable for any losses incurred.
#6 – Ineptitude or Negligence
– Sometimes a financial advisor simply makes a mistake, resulting in damages for the investor. Such claims for negligence can be actionable.
#5 – Margin problems
– Brokers often recommend that an investor invest on margin (borrowing money with their stock portfolio as collateral). Such an investment strategy has risk and can be inappropriate for certain investors.
#4 – Excessive Trading (Churning)
– Any time a broker trades for the explicit purpose of generating commissions, such trading is inappropriate. If it becomes pervasive, such trading can legally be considered churning.
#3 – Over-concentration
– Any portfolio should be diversified amongst various investments, investment types, and investment sectors. If a broker over-concentrates an investor’s portfolio in any particular investment, such a recommendation is inappropriate.
#2 – Failure to Perform Due Diligence
– Brokerage firms have a fiduciary duty to research an investment prior to offering it for sale to its clients. Unfortunately, brokerage firms sometimes fail to perform the necessary due diligence and market and sell improper investments, like Ponzi schemes.
#1 – Unsuitability
– Not all investments are suitable for every investor. For example, certain high risk investments are inappropriate for retired or conservative investors.
If you have questions about these types of securities fraud, or believe you have been the victim of a securities fraud, please feel free to call our Chicago office at 312/238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.Tags: Ameriprise Financial, broker fraud, broker negligence, Chicago securities attorney, churning, churning fraud, excessive trading, Financial Advisor, financial advisor negligence, FINRA investigation, investment fraud, investment losses, investor fraud, investor losses, investor protection, margin call attorney, securites fraud, securites misrepresentation, securities arbitration, securities losses, securities regulation, The White Law Group, top 10 investor fraud, top 10 securities fraud, top 10 stock fraud, types of securities fraud, unethical practices Last modified: July 17, 2015