Have You Been the Victim of Stockbroker Fraud or Misconduct?
Identifying misconduct and steps to take to avoid being victimized
As investment portfolio values continue to tumble, increasing numbers of investors and shareholders are questioning whether they have been properly advised and represented by their brokers and brokerage firms.
Most investors lack the expertise needed to detect stockbroker misconduct, but there things you can do if you suspect stockbroker fraud, and resources to turn to for answers or legal representation. The securities fraud attorneys at Dimond, Kaplan & Rothstein, P.A. (DKR) have both the investment knowledge and the legal experience to help you understand what has happened to your investment portfolio and whether wrongdoing occurred.
Our securities lawyers help investors recover investment losses by holding brokers and brokerage firms accountable for their negligent and fraudulent investment practices. Contact our Miami or West Palm Beach securities law office to schedule a free consultation.
Steps you can take to avoid being victimized
Stockbroker misconduct cannot always be prevented, but there are things investors can do to minimize the chance of serious investment losses due to fraud or unethical broker behavior.
1. Investigate the broker's background
The background of every licensed broker is maintained in a computerized database called the Central Registration Depository (CRD). The CRD will reveal if clients have filed complaints against the broker, the amount of money paid to resolve the complaints, and whether the NASD or NYSE has ever fined or suspended the broker.
Investors can obtain this information from FINRA BrokerCheck® Outbound or via e-mail to the state of Florida. You can also request a broker's CRD information by telephoning FINRA BrokerCheck® at 800-289-9999 or the state of Florida at 850-413-3100 or 850-410-9805.
2. Complete and review new account forms fully and accurately
When an investor opens a brokerage account, they are required to complete various forms, including forms that outline the client's investment objectives, risk tolerance, income and net worth. The brokerage firm relies on these documents to determine if investments are suitable. If you later wish to bring a legal claim for unsuitability, these documents will provide essential support for your case. Investors should review these documents carefully to ensure that the information provided is accurate.
3. Review account statements and trade confirmations promptly
Investors should review trade confirmations and monthly account statements as soon as they are received. Do not rely on account summaries prepared by a broker. A careful review of these statements and confirmations can identify unauthorized trading and excessive trading.
4. Understand the true purpose of a "happiness" letter
When a brokerage firm's reports reveal questionable account activity, many firms send a letter to a client commonly referred to as a "happiness" letter. The stated purpose of these letters is to inform clients of account activity — the unstated purpose is to alert the client of potential stockbroker misconduct. The letter often instructs the client to contact the branch manager with any questions, without clearly stating why a client might want to do so.
Recognize this letter for what it is — a warning sign that you may have been the victim of stockbroker misconduct. Contact the branch manager and inform the branch manager of your investment objectives and risk tolerance. Ask if there has been any account activity that is inconsistent with your investor profile. If the branch manager identifies problems, request that changes be made to resolve the problems. Consider changing brokers or brokerage firms.
5. Address Questionable Activity Immediately
Delays in contacting a broker or branch manager about account-related problems can decrease the possibility of bringing a later legal claim for stock fraud or stockbroker misconduct. If you suspect questionable activity, address issues with brokers and branch managers as soon as possible. Document your concerns in writing.
6. Close the Account
Last, but certainly not least, if you identify broker misconduct, close your accounts and find another broker.
Advocating for maximum recovery of your investment losses
For a free initial consultation about how to recover financially after investment losses, contact an experienced securities fraud lawyer at a DKR office in Miami or West Palm Beach. We represent investors in Florida and nationwide in claims to recoup investment losses due to stockbroker and brokerage firm misconduct and securities and stock fraud. Call 888.578.6255 to discuss your claim.