Attorney Matthew Wolper explains the four most common types of stockbroker fraud.
FORT LAUDERDALE, FL, October 27, 2022 /24-7PressRelease/ — Investors rely on their stockbrokers to give them objective advice and guide them in reaching their financial goals. The problem is that sometimes brokers will put their interests ahead of the interests of investors and make bad recommendations. This means that when things become volatile, these investors lose money.
The volatile market conditions are making stockbroker fraud more common. Here are the four most common forms of stockbroker fraud.
Supplying False or Misleading Information
Your broker has a legal obligation to disclose the most accurate information possible. This means they must state any possible issues such as volatility and bad news. Omitting this information is considered to be a breach of duty — they must disclose all of the facts to you. Many times, brokers are concerned about making a commission and fear that giving you too much information will cause you to hesitate. They don’t make money when this happens and have an interest in only telling you all the good things about the investment.
Trading without Authorization
You must always give your permission to buy or sell anything. The moment your broker doesn’t do this is when they are engaging in unauthorized trading. They can be punished by FINRA for not getting your authorization to do the trades.
Some investments are considered to be unsuitable. Your broker must take into consideration your risk tolerance, comfort levels, income, investing experience, and net worth. All these factors mean that any recommendations must be in line with your investment objectives.
The Lack of Diversification
Diversification is when you buy different asset classes, such as stock and bonds. The idea is to prevent large swings in your portfolio when the markets are going down. During sustained downtrends such as bear markets, this is necessary to preserve the value of your account. Failing to take into consideration these changes and not diversifying is a breach of their fiduciary responsibility. Your broker must make sure that you are diversified properly to protect against prolonged downturns.
These are the four most common forms of stockbroker fraud. The volatility in the markets is increasing the odds of this happening to you. You want to be watchful of your account and make sure that you are ready for anything.
If you suspect this is happening to you contact us right away. According to our founder Matthew Wolper, our focus is on helping you. “Our firm is proud to offer free, no-obligation consultations to investors who have been taken advantage of by unscrupulous stockbrokers,” states Wolper.
The Wolper Law Firm can help you to understand what is happening with your investments. We offer a free consultation and have a 99% success rate in fighting stockbroker fraud. The volatility in the markets is increasing the chances of this happening, and you need to explore your options.
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