Stock and Investment Fraud
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Main types of investment fraud claims
Investment advisers, financial planners, stockbrokers, even life insurance companies and agents have devised many methods of defrauding consumers, due in large part to the lucrative nature of such scams. These practices deliver big payoffs and provide plenty of incentive to bend the law, and even break it, which is why consumers should be aware of the numerous types of investment fraud. Here are the most common:
- “Never say sell!” – Some investment advisers, financial planners, stockbrokers, even life insurance agents rarely if ever advise you to stay out of the market. They always want you to buy, buy, buy. Occasionally they may advise you to hold, but you will rarely ever hear your broker to advise you to stay away from the market. The reason is obvious. If you stay away, he doesn’t make a dime. Frankly, after he has you invested he doesn’t make anything at all. That is why you probably hear nothing at all from your broker after he has your money.In truth, sometimes the best advice is to sell. But, if you sell, you take money away from your broker, money he may never get back. So, the broker’s mantra is “Never say sell.” If you broker’s mantra is “never say sell” then it is likely you have a broker more interested in his profits than yours. Therefore, if you lost money (he certainly doesn’t lose anything when you lose) then you may have been the victim of incompetent advice or even fraud for which you may be eligible for compensation.
- Poor investment insights – every broker has a basic, core obligation to make investment recommendations that are right for their clients. To intentionally provide advice that conflicts with a client’s needs, wants or goals, may be a manifestation of investment fraud.
- Failure to provide the facts – a broker is also charged with providing all of the important and necessary information to a client about a particular investment decision. Neglecting to include data, no matter how insignificant, taints the business relationship between broker and client, and leaves the consumer at a disadvantage. Federal and state laws are very clear in this area, asserting that a broker must be forthcoming with the truth and fact-based support.
- Investing without permission – it may seem like an assumed condition, but brokers are bound by law to make trades and other important investment decisions only with the permission of the consumer. Using a client’s funds without consent is a flagrant violation of good business ethics and a clear case of investment fraud.
- Portfolio mismanagement – if a broker fails to diversify a client’s funds and sinks a large amount of money into one type of investment, dramatically increasing the risk of loss, the broker may be violating the consumer’s legal rights.
- “Churning” – term used to describe a broker’s excessive trading habits, which is usually a tactic employed to benefit the broker, rather than the investor. Churning places the burden of proof on the consumer, who must illustrate that the broker was in fact making an excessive amount of trades.
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Filing a claim
If you are a victim of investment fraud, you may want to seek compensation for your financial losses. State and federal laws, however, implement a statute of limitations, which provides consumers with a window of time in which to file a lawsuit after the investment fraud incident occurred. If you do not act promptly, you may be at risk of forfeiting your legal rights. In many instances of investment fraud, a group of people with similar complaints can come together and form a consumer fraud class action lawsuit, a joint, collective effort to recover damages.
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How do I get started?
Please fill out the Free Case Evaluation form on the top right side of this page and we will respond within 24 hours.