People hire stockbrokers, brokerage firms, and financial advisors to help manage their money and provide valuable guidance to grow their wealth through prudent investments. When you hire a broker, you expect that they will always act in your best interests, recommending opportunities and solutions to help you achieve your financial goals. After all, brokers are bound by both the law and their professional obligations to do so.
However, some brokers and firms violate their clients’ trust by engaging in fraudulent behavior and misconduct. This can include making investment decisions and recommendations that financially benefit the broker or firm at the client’s expense. If you believe this has happened to you, a California stockbroker fraud attorney can help you pursue financial compensation for the money that you lost.
At Erez Law, PLLC, our nationally recognized attorneys have spent more than 20 years focused exclusively on helping people who have been taken advantage of by financial professionals. People from across California, the United States, and around the world turn to our firm for aggressive legal representation. We have what it takes to face even the most powerful Wall Street firms, with a 99% success rate and more than $175 million recovered for our clients.
If you suspect your investment losses are due to fraud or other misconduct, please reach out to Erez Law, PLLC, for a free case review with a California stockbroker fraud attorney. We work with investors across Los Angeles, San Diego, San Jose, and throughout California. There are no fees unless we recover compensation in your stock market fraud case.
What Is Considered Stockbroker Fraud?
A stockbroker or a brokerage firm may commit fraud through either intentional or reckless misconduct. Brokers and firms are required to determine an investment strategy for each client based on that client’s income and financial situation, personal circumstances, risk tolerance, and investment goals. If the broker makes investment recommendations or decisions that do not reasonably fit within the investment strategy chosen for the client, they may have committed fraud. In many cases, this fraud enriches the broker or brokerage to the detriment of the client. A client who suffers financial loss from stockbroker fraud may be entitled to pursue a legal claim to recover compensation.
What Are the Signs of Stock Fraud?
Signs that your stockbroker or brokerage firm may be engaged in fraudulent activity or misconduct include:
- Your brokerage account statements do not add up or contain transactions you cannot identify and did not authorize.
- You suffer a significant drop in the value of an investment or investments in a short period of time.
- Your investments are losing money despite the market broadly rising in value.
- Your broker regularly recommends investments that lose value.
- Your broker recommends or begins trading on your behalf in highly speculative and risky investments, especially where you have not chosen to pursue a high-risk investment strategy.
- Your broker fails to disclose material information about particular investments or an overall investment strategy.
- You are assessed capital gains taxes even though your portfolio has declined in value.
- Your broker doesn’t return your phone calls or emails.
While these signs do not conclusively prove that you have been the victim of fraud, they should motivate you to speak to a California stockbroker fraud attorney. An experienced securities fraud lawyer can dig deeper into your broker’s conduct and determine if fraud was indeed committed, then advise you on your options for pursuing justice.
Common Types of Stockbroker Fraud
Common examples of conduct that may constitute stockbroker fraud include:
- Excessive trading, or making an unreasonable number of trades in a client’s account, usually to generate extra fees for the broker or brokerage firm
- Selling away, or liquidating a client’s entire portfolio or position in an investment when the client did not approve that decision
- Unauthorized trading, including trading in accounts that require client approval for all transactions
- Unsuitable investments, or recommending or investing clients in investments that do not fit with the client’s strategy, risk tolerance, or financial goals and needs
- Lack of diversification, or failing to ensure that a client’s portfolio is balanced across a variety of industries, sectors, and investment types
- Excessive use of margin, or making investments using borrowed money, which must be paid back by the client if the investment loses value
- Misrepresentation or omission, or making false statements about a stock to encourage investment
- Churning, which refers to the practice by a broker or brokerage firm of directing clients to an investment because it generates higher commissions for the broker or firm, without regard to whether the investment fits a client’s goals
- Pump and dump schemes, which involve making fraudulent representations to induce people to invest in a stock, thereby artificially inflating the price so that the scheme’s organizers then sell their stock at the inflated price, often resulting in the collapse of the stock’s value
- Unregistered securities sales, or investing a client in startups or other non-publicly traded companies without the client’s knowledge or approval
- Failure to execute trades requested by the investor
- Failure to supervise, or a brokerage firm’s failure to oversee the activities of the individual brokers at the firm
- Misleading or incomplete information regarding potential investments
- Misappropriation, or taking a client’s assets or money for the broker’s or firm’s own benefit
- Overconcentration, or inappropriately putting too much of a client’s portfolio into a particular investment or industry/sector
- Breach of fiduciary duty, or a broker or firm’s violation of its obligation to act reasonably and in good faith when representing a client, and to always put the client’s interests ahead of their own when making decisions on behalf of that client
- Broker negligence, or failing to take a prudent course of action that any reasonable broker would take
- Violation of state and federal regulations, in addition to violation of FINRA regulations and codes of conduct
How Our California Stockbroker Fraud Attorney Can Help You
If you suspect that your stockbroker or brokerage may have committed fraud against you, a California stockbroker fraud attorney from Erez Law, PLLC, can help you by:
- Investigating the facts and circumstances of the alleged fraudulent conduct to secure any evidence that can be used to help prove your case, including reviewing your brokerage account records, financial records from the brokerage firm or the companies you were invested in, and overall expert market analysis
- Calculating the financial losses that you incurred due to the fraud
- Explaining your legal rights and discussing your options for filing formal complaints against your broker with FINRA or government regulators
- Hiring expert witnesses as needed to help build a persuasive case on your behalf
- Aggressively fighting for the full and fair compensation you deserve
Time Limits for Taking Action in a Stock Fraud Case
Federal and California state statutes of limitations can apply to lawsuits regarding securities fraud against a broker or brokerage. However, these time limits can vary depending on the circumstances of the underlying case. The Financial Industry Regulatory Authority (FINRA) also sets strict time limits for how long investors have to take legal action.
Time is of the essence in any stockbroker fraud claim. As soon as you suspect misconduct has occurred, you should seek legal advice from a trusted California securities attorney.
Talk to a California Stock Fraud Lawyer Now
If you believe that your stockbroker or brokerage firm may have engaged in fraudulent conduct that caused you to suffer financial losses, contact Erez Law, PLLC, for a free consultation. A California stock market fraud lawyer from our legal team can help you understand your options and fight for compensation for your investment losses.