Protect Your Money by Understanding Stockbroker Fraud
In this multi-part series of blog posts, we are going to talk about how to protect your money from stockbroker fraud. Investing is a wonderful way to grow your money, but it also can expose you to abuse by people in positions of trust. One of the most important things you can do to protect yourself is to know as much as possible about where your money is going and making sure it is entrusted to the right person or brokerage firm.
In this first installment, we discuss understanding stockbroker fraud. Subsequent posts will discuss identifying stockbroker fraud and what to do if you become the unfortunate victim of stockbroker fraud.
What is Stockbroker Fraud?
First, it is important to understand what a stockbroker does and how you can become the victim of stockbroker fraud. A stockbroker (or “broker”) is a regulated professional who works with a brokerage firm, provides investment advice, and sells stocks or other securities in exchange for a commission or fee.
Stockbrokers are in a position of trust because the average investor relies on the broker’s knowledge to recommend suitable investments based on the investors’ stated investment objectives, risk tolerance, and investment needs.
Stockbroker fraud can come in many forms, ranging from churning, to misrepresentation or omission. Fraud can be difficult to spot, even to the trained eye. Churning, for example, is the buying and selling of securities for the primary purpose of generating commissions, regardless of whether the trades makes sense for the investor.
Types of Stockbroker Fraud
Other forms of stockbroker fraud can include but are not limited to:
- Misrepresenting the nature or risks of an investment
- Social Media Fraud
- Microcap Fraud
- Advance Fee Fraud
- Foreign Currency Trading Fraud
- High Yield Investment Programs
Stay tuned for Part 2 of our blog series, in which we will discuss what to do to help avoid becoming the victim of stockbroker fraud.
Call a Stockbroker Fraud Attorney Today
If you have suffered a loss because your broker or brokerage firm misrepresented or omitted crucial information about an investment, you may have legal rights that require your immediate attention. Such misrepresentations could be as basic at representing that a risky investment was safe and secure.
Contact an attorney today to schedule an appointment or consultation to review your rights and options.