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Actionable offenses

Securities Fraud

Stock market losses derived from a white collar crime in which a person or company such as a stockbroker, brokerage firm, corporation or investment bank misrepresents information that investors use to make decisions.

Securities fraud can also be committed by independent individuals such as by engaging in insider trading. The types of misrepresentation involved in this crime includes providing false information, withholding key information, offering bad advice, and offering or acting on inside information.

Broker Negligence

Stock brokers and investment professionals deviating from federal securities laws and self regulation rules established by the nasd (finra) and NYSE. When brokers circumvent the standard of care laws put in place by regulators this opens up a form of misconduct leading to potential recovery of stock market losses.

Suitability

When your broker recommends that you buy or sell a particular security your broker must have a reasonable basis for believing it is suitable for the investor. In making this assessment your broker must consider your risk tolerance, other security holdings, and your current financial situation (income and net worth).

If you believe your broker made unsuitable recommendations leading to stock losses it may fall under NASD (finra) rule 2310 or NYSE rule 405.

Churning (excessive trading)

To trade securities very actively in a brokerage account in order to increase broker commissions rather than customer profits. Brokers may be tempted to churn accounts because their income is directly related to the volume of trading undertaken by customers. Churning is illegal and unethical and is definitive grounds to sue your stock broker or investment professional.

Margin Account Fraud

Even many experienced investors do not understand margin accounts. When you purchase securities on margin your brokerage firm is lending you money to pay for these securities. Trading on margin increases the risk of loss to a customer.

At the same time using margin permits the customer to purchase a greater amount of securities, thereby generating increased commissions for the salesperson. The unsuitable extension of margin credit is a form of stock fraud.

Unauthorized Trading

Trading without prior consent from the client and is a form of fraud. Unless you have a discretionary paperwork giving your broker permission to trade your account without your authorization, your broker is required to obtain your permission before buying or selling a security in your account; this is known as a non-discretionary account.

Any trades done without prior permission is grounds for a claim towards recovering your stock market losses.

Breach of Fiduciary Duty

A fiduciary duty is an obligation to act in the best interest of another party. The law forbids the fiduciary from acting in a manner adverse to the contrary interest of the client. A person acting in a fiduciary capacity is held to a high standard of honesty and full disclosure, deviating from these responsibilities may lead to stock market losses.

Financial Suicide

Investment professionals including stock brokers have a duty to refuse unsolicited transactions when the trades are inappropriate for a customer based upon the financial condition of the client.

Mutual Fund Fraud

Brokers or investment professionals steering mutual fund investors to back end loaded funds known as "B" shares have been deemed fraudulent or deceptive by securities regulators. Front end loaded mutual funds better known as "A" shares earn clients a break point which is more beneficial to clients at a lower cost investment. This is a form of industry misconduct or stock broker fraud.

False Statements or Omissions

State and federal securities laws prohibit brokers from making false statements or omissions of material facts in the connection with the sale of securities. False statements often include guarantees, price predictions, and purporting special information. This is a form of stock broker fraud of misconduct.

Failure to Execute

When executing a trade, brokers have a reasonable amount of time to enter the order. Actions may also be based upon your brokers on refusal to sell a security or based upon dissuading the client from selling a particular security. Brokers must follow through on directions from their clients; if not there is grounds to recoup your market losses.

Failure to Supervise

Brokerage firms have a duty to supervise their brokers, and the sales practices of their brokers. Stock market losses derived from failure to supervise is a form of broker misconduct and is actionable under federal securities laws.

Limited Partnerships

Are special types of partnerships which are very common when people need funding for a business or where they are putting together an investment in the development stage of a company. A limited partnership requires a written agreement between the business management who are general partners and all of the limited partners.

Each limited partner makes an investment of funds into the partnership and is required to receive a pre-stated share of the profit which is ordinarily greater than that of each of the general partnership to the point of return on investment, which in turn then assumes a lesser share than the general partners. The maximum number of limited partnerships is set by state law to prevent using interests in limited partnerships as if they were stock shares of a corporation.

Limited partnerships are registered with the secretary of state with names and addresses of general partners so the public can find out who are the responsible parties in claims of debts in bankruptcy and lawsuits against the partnership.

Over Concentration

Lack of diversity occurring when a portfolio invests a disproportionately large percent of its assets in a single stock, industry or sector. Over concentration exposes investors to increased risk. Financial professionals have a duty to protect their customers from unnecessary risk through asset allocation and diversification. A well managed portfolio is one that is both properly allocated and well diversified. A failure of one or both of these requirements often leads to broker wrongdoing claims.

Incorrect Trades

Consists of untimely reportings by the brokerage firm, improper bunching of trades, listing of incorrect price, erroneous trading and filing of erroneous trades. Any of the above actions by your broker or brokerage firm can entitle you to recover partial or full reimbursement of your stock market losses.

Improper Sellouts

Being sold or liquidated out of a stock holding without prior knowledge due to a margin call or margin requirement change. The most common improper sellouts arise from clients not knowing they are trading in a margin account or the full understanding of margin maintenance. Improper sellouts may pertain to unauthorized trading of margin account fraud which is potential fraud against a broker or investment professional.

High Turnover Rate

Measuring the buying and selling of stocks by calculating the customer's trading activity. Turnover rate is calculated by looking at the amount of new securities purchased and the amount of securities sold over a particular period of time.

A broker with a high portfolio turnover rate will typically incur more transaction costs. This is known as churning and is an unethical and illegal act that may entitle you to recovery of your market losses.

Our extensive experience with all of the above offenses gives us an industry insiders clear cut advantage in diagnosing and preparing a game plan to recover your stock market losses.

If you are a victim of any of the offenses listed above you should get a portfolio analysis done by one of our professionals so we can begin the process of recovering your stock market losses.