Broker Fraud and Class-Action Lawsuits

Broker fraud is the illegal act of deceiving an investor or violating his or her instructions in order to benefit the broker or the brokerage firm. Stockbrokers have a responsibility to act sensibly with clients' money and to avoid unnecessary or unreasonable risk. When they fail to do so, they may not only be in violation of the law, but they may also be liable for any financial damages caused to the client.

If you suspect your broker of committing fraud and hurting your investments, consider consulting with a securities fraud class-action lawyer as soon as possible.

Types of Broker Fraud

This type of fraudulent activity can be found at all levels of investing. There are many ways that a broker may commit fraud, including:

  • Unauthorized trading: Acting without the client's permission or violating his or her explicit instructions
  • Misrepresentation or omission: Misrepresenting or omitting facts relating investments
  • Unsuitability: Making investment suggestions that are not suitable for an investor's needs or accepted level of risk
  • Churning: Unnecessarily buying or selling stock to gain greater commission payments
  • Overconcentration: Overconcentrating an investor's stock portfolio in a single stock or a few stocks

Any of these actions of fraud can cause significant damage to investors' finances. Not only is this type of fraud a violation of the law, but it is also a violation of clients' trust that can qualify as grounds for a class-action lawsuit. If you are an investor and suspect or have evidence of broker fraud, you may be entitled to recover compensation for your financial losses.

Source by James Witherspoon

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