What is Investment Fraud & Stockbroker Misconduct?

What is Investment Fraud & Stockbroker Misconduct?

When you are planning for your family’s long-term future, a prudent financial strategy is critical. It is important to know that you can rely on the advice of your stockbroker when deciding how and where to invest your savings in the stock market. Unfortunately, and in an effort to make a sale, a stockbroker might induce you to invest on the basis of false or incomplete information – this is investment fraud, and is also known as stock fraud. This sort of misinformation or incomplete information is just one of several ways that your stockbroker may have committed a violation of securities laws.

Types of stockbroker fraud can include:

  1. Unsuitable or untenable investments
  2. Misrepresentation of Facts
  3. Failure to Diversity or Overconcentration
  4. Churning
  5. Withdrawal of funds without proper authorization

When you speak with a stockbroker, he or she must disclose both the positives and negatives of any particular investment. Investment fraud can result from stockbroker misconduct in many other ways, including as a result of theft or embezzlement, misstatements in public reports, insider trading and much more.

As a result, investors suffer significant losses because they were not told the truth or the risk of an investment. A stockbroker must always explain the nature of an investment – even if you are given only truthful information about a particular investment, a failure or omission to tell an investor about the risks of an investment also constitutes fraud. A stockbroker has a duty to tell you both the good and the bad about any type of investment.

It is important to realize that even if your stocks lose money, it isn’t necessarily investment fraud or stockbroker misconduct. The stock market does rise and fall, and if you are concerned over potential losses you should consult your stockbroker and discuss your investment portfolio and strategy and consider an alternate course of action.

Contact a Los Angeles Securities Fraud Attorney Today

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