Anytime that you hire a financial stock broker or financial adviser, you trusting that the firm or organization will handle your “numbers” and portfolio with the utmost respect, attention, and care, and up to industry ethics.
Unfortunately, as many different securities fraud cases victims can attest, not every broker has upstanding ethics and a commitment to a client’s best interests.
Securities violations are also known as securities fraud. This type of fraud happens when a party uses misrepresentation, untrue statements or frauds in connection with a securities transaction.
There are several different types of securities violations that may lead a victim to pursue a legal claim against the responsible party. These include insider trading, churning or unauthorized trading.
Read on to learn more about each of these types of securities violations.
1. Insider Trading – Individuals who have inside knowledge about a company’s stock activity are not allowed to use this information in order to gain personal advantage on a trade.
If your broker passes on unauthorized information to you, you could end up in just as much legal trouble as the broker. It’s a good idea to always work with a broker who has a good reputation in the field.
You can conduct research about your broker’s background with the Financial Industry Regulatory Authority (FINRA) to see whether any previous complaints have been filed against a particular broker or organization.
While this isn’t a foolproof method for identifying individuals who violate securities fraud laws, it’s a good idea to do your research ahead of time.
If you end up becoming the victim of securities fraud, you can also help prevent future incidents like this for others by filing your own client complaint with FINRA in addition to taking legal action.
2. Churning – Churning refers to activity in which a broker engages in too much trading in order to boost their sales commissions. When stock brokers have payouts based on their commissions, they may engage in unnecessary trades in order to boost the money they collect from this activity.
Take a careful look at your statements to see if any evidence of churning is present. Putting together evidence and presenting it to a business lawyer is a good idea if you suspect something is out of the ordinary.
The sooner you can speak to an attorney, the sooner you’ll be able to move forward with action is churning has indeed occurred.
This is prohibited by securities laws and is also considered unethical. If you believe that you have questionable activity on your account or that a broker is taking advantage of you,then make it a point to speak with a business attorney as soon as possible to protect your rights.
Visit this site here to learn more about churning.
Unauthorized Trading – Generally, trustees do have some flexibility and freedom in order to invest reasonably and prudently, meaning that they can use their discretion to some extent. However, this does not mean that they can engage in trading against the wishes of the stockholder.
Read more about securities fraud laws in Florida here.
Victim of Securities Fraud? Get Legal Help from a Business Attorney
Discovering that you’ve been a victim of securities fraud is never easy, and can even shatter your confidence and financial stability. Reaching out to get legal help is essential so that you understand all of your options and can move forward with an informed and educated decision.
It’s good to have an existing trusting relationship with your stock advisor or broker so as to minimize this situation. However, if you believe that someone has been taking advantage of your relationship, you need to consult with a business law attorney.