We trust stockbrokers, financial advisors, and investment firms to help manage our money by providing knowledgeable advice. Given the trust that you place in your broker, you have every right to expect that they will act in your best interests. Unfortunately, some brokers and brokerage firms choose to take advantage of their clients’ trust and money by engaging in fraudulent behavior or misconduct to enrich themselves at their clients’ expense. If this has happened to you, a Texas stockbroker fraud attorney can help you demand compensation for your losses.
For more than 20 years, the attorneys of Erez Law, PLLC, have advocated on behalf of victims of broker fraud and misconduct. Investors from throughout Texas, across the United States, and around the world have relied on our legal team’s experience and resources to hold brokers and investment firms accountable for fraudulent behavior. Our track record of results includes more than $175 million in financial compensation recovered on behalf of our clients.
If you have lost money due to investment fraud, turn to Erez Law, PLLC, for a free initial case review. A Texas stockbroker fraud attorney from our firm can explain your legal options and answer all your questions. Our law firm works on a contingency fee basis, so you only pay for our services when we win a recovery for you. Contact a legal representative today!
What Is Considered Stockbroker Fraud?
Stockbroker fraud occurs when a broker’s misconduct or reckless decisions cause a client to suffer financial losses or loss of investment opportunities. A broker’s duty to a client includes identifying an investment strategy tailored to the client’s unique financial situation, future goals, and risk tolerance. The broker must then make investment recommendations and decisions that follow the client’s investment strategy. When a broker makes unreasonable investment decisions or decisions meant to benefit the broker or the firm rather than the client, the investor can suffer losses as a result.
How to Spot Signs of Stock Fraud
Some of the most common warning signs indicating broker misconduct include:
- Your broker fails to disclose material information regarding prospective investments.
- Your broker tells you to stop following market news.
- Your broker begins putting you in speculative or high-risk investments even though you have not approved a high-risk investment strategy.
- You cannot understand your account statements, or your statements show transactions you did not authorize or know about, including purchases and sales of stock or credits and debits of cash from your account.
- The investments your broker makes on your behalf regularly lose money or regularly report financial results below market expectations.
- You experience a significant drop in the value of your investments in a short period of time, or your investments drop in value despite overall market growth.
- Your broker stops taking your calls or responding to emails.
These signs do not necessarily mean that securities fraud has occurred, as most investments come with the risk of loss. However, if you do experience these signs, you should talk to a Texas stockbroker fraud attorney who can conduct a thorough investigation of your situation and determine whether investment fraud occurred.
What Are the Common Types of Stockbroker Fraud?
Common examples of stockbroker fraud include:
- Excessive trading, usually done to generate more of the fees that are earned by a broker on each trade
- Selling away, or liquidating a client’s portfolio without authorization
- Unauthorized trading, especially where an account requires a broker to obtain client authorization for each trade
- Unsuitable investments, such as making speculative trades for a client approaching retirement age
- Lack of diversification, as a reasonable portfolio requires investment in different industries/sectors and types of securities
- Excessive use of margin, which may leave a client liable to pay back margin funds with cash if trades ultimately lose value
- Misrepresentation or omission of important information about investments
- Churning, which refers to a broker selecting investments based on the commissions rather than whether an investment fits into a client’s strategy
- Pump and dump schemes, or those in which the value of an investment is artificially inflated by fraudulently inducing investors to buy in, which allows the scheme’s organizers to sell at a high price at the expense of the other investors
- Unregistered securities sales, such as investments in high-risk emerging companies or startups
- Failure to execute trades, especially trades specifically requested by the client
- Failure to supervise, or a brokerage firm’s failure to oversee the conduct of the individual brokers it employs
- Misleading or incomplete disclosures regarding the broker’s or firm’s conflicts of interest, such as fees or commissions that your broker or firm stands to earn if you choose a particular investment
- Misappropriation, or taking a client’s funds or assets
- Overconcentration, or allocating too much of a client’s portfolio into an individual investment or into a single sector/industry
- Breach of fiduciary duty, or the duty of a broker to act in good faith by placing the client’s interests ahead of the interests of the broker
- Broker negligence, which can include a range of actions or inaction such as failing to diversify a client’s portfolio or failing to execute transactions requested by the client in a timely manner
- Violation of state and federal regulations, or violation of FINRA regulations
How Our Texas Stockbroker Fraud Attorney Can Help You
If you have lost money because of fraudulent conduct on the part of your stockbroker or brokerage firm, you should seek legal advice immediately. A Texas stockbroker fraud attorney from Erez Law, PLLC, can help you pursue financial compensation and accountability by:
- Thoroughly investigating your case to uncover the fraudulent behavior or misconduct of your broker or brokerage firm
- Securing and reviewing all of the evidence in your case, such as your brokerage account statements, financial records, market history reports, and communications
- Collaborating with expert witnesses as necessary to help explain your broker’s misconduct or to calculate the losses that you have suffered because of the fraud
- Explaining your legal rights and options to you, such as pursuing formal complaints with regulators
- Fighting for maximum compensation for your investment losses
When you work with Erez Law, PLLC, you can trust us to pursue the full and fair financial recovery you deserve and to fight to hold your broker and firm accountable for their fraudulent behavior.
Time Limits for Taking Action
Federal and Texas securities laws set strict time limits for how long you have to file a stockbroker fraud lawsuit seeking compensation for your investment losses. The Financial Industry Regulatory Authority (FINRA) also has its own time limits for filing a claim.
Because these stock market fraud cases can be so complex, you should speak to a Texas stockbroker fraud attorney as soon as possible about the specifics of your claim. It is crucial to ensure no deadlines are missed and your right to recover compensation is preserved.
Talk to a Texas Stock Fraud Lawyer Now
You deserve to hold your stockbroker accountable for fraudulent behavior or misconduct that causes you to suffer an investment loss. Contact Erez Law, PLLC, today for a free and confidential consultation and to learn more about how a Texas stockbroker fraud lawyer can help you pursue a legal claim for compensation. We work with clients in Houston, San Antonio, Dallas, and throughout the state of Texas.