What to Do if You Suspect Stockbroker Misconduct

If a review of your account statements or trade confirmations reveals questionable account activity, or if you do not understand something in your account, you should address any concerns immediately.

1. Contact the Broker and Branch Manager

You should discuss any concerns that they have with your broker. If you are not satisfied with the broker’s response, you should immediately address the issues with the branch manager. Any problems should be addressed as soon as you identify them, as significant delays in addressing problems can negatively affect your potential claims against a broker and brokerage firm. Moreover, certain statutes of limitations can apply to claims, and you could be prevented from bringing a legal claim if you fail to file a claim within the required period of time.

2.Market Losses Are Not Always the Cause of Investment Losses

Brokers and branch managers frequently represent that investment losses are solely the result of “market losses.” But this is not always true. Stockbroker misconduct can cause account losses that are much greater than general market losses. If you receive such an explanation you should consider having your accounts reviewed by either another broker or by an attorney who has experience representing investors in stockbroker misconduct cases. This analysis will reveal whether your losses truly are the result of a general market decline.

For example, if you wanted to be invested in a diversified stock portfolio, you should request that the performance of your account be compared to that of the S&P 500 Index. If your account performed significantly worse than the S&P 500 Index, your investment losses might be the result of wrongdoing. If you had a stated investment objective of income with a low risk tolerance, however, the S&P 500 Index would not be the appropriate benchmark against which to compare your account’s performance. In that case, you likely should have been invested primarily in conservative bonds. As such, your account’s performance properly should be compared to the performance of a conservative bond index.

3. Seek the Assistance of a Lawyer

Investors who believe that they are a stockbroker misconduct victim often are inclined to attempt to recover their investment losses from the brokerage firm on their own. This frequently is ineffective. Brokerage firms often claim that there was no wrongdoing. And in those instances where a firm offers money to resolve a dispute, the offer usually is far less than the investor’s losses.

Investors also obtain little to no benefit from contacting the SEC or FINRA. While these organizations are charged with policing the securities industry, they generally do not assist investors in the recovery of investment losses.

If you believe that you are a victim of stockbroker misconduct, you should seek the advice of a lawyer who has expertise in the area of securities arbitration and litigation. Most consultations of this nature are free, and such an attorney will possess the requisite knowledge to determine if you have a valid claim to recover the investment losses.