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Call 866-948-3773 for a
free Consultation or fill
out the form below to
contact us by email.
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Stock And Investor Fraud
What Is Stock Fraud?
Stock fraud occurs when a
broker or other investment
professional violates the trust
you have placed in him and
as a result, violates the rules
which govern their profession.
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Name
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Phone
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Email
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Description
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Misrepresentation Or Omission Of Important Facts
This can involve providing misinformation or omitting pertinent facts regarding your
financial decisions. For example, a broker might claim that he knows the future price
of a stock, that his firm controls the stock’s price, or that he has inside information
regarding a company’s stock.
Excessive, Unnecessary Trading
This is often referred to as churning, and occurs when a broker, who has explicit
authority or practical control over an investor’s account, engages in excessive
trading to generate larger commissions.
Trading Without Authorization
A broker may fail to consult the client before making trades in a non-discretionary
account or ignore specific instructions by the client regarding a discretionary
account.
Failure To Follow Investor’s Instructions
Failure to adhere to an investor’s directions can result in large losses. An investment
professional is obligated to initiate transactions as their clients direct.
Misappropriation Of The Investor’s Funds
Misuse of an investor’s funds is often accompanied by the broker’s failure to report
the transaction to his employer. Regardless of the firm’s knowledge of its employees’
activities, the company is responsible for the misappropriation of the investor’s
money.
Unsuitable Investments
This occurs when a broker or financial planner recommends inappropriate
investments – in light of the client’s economic circumstances or financial objectives.
For example: an unsuitable investment occurs when a financial planner recommends
that his client (a retiree needing regular income) placed all of her money into high-
risk stocks or mutual funds, depriving her of the regular income she needs to survive.
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What Is Arbitration?
Most brokerage agreements contain an arbitration clause, which
requires the investor and the brokerage firm to settle any disputes
through the arbitration process rather than through litigation in the court
system. Arbitration is less formal than a normal lawsuit; it usually occurs
in a conference room with one to three lawyers acting as the decision
makers, or arbitrators. Most arbitration proceedings are handled by one
of the major arbitration providers such as, the American Arbitration
Association for Mediation, the National Association of Securities Dealers,
or the New York Stock Exchange.
How Does Arbitration Work?
An arbitration hearing is typically held approximately twelve to eighteen
months after the claim is filed. Before the hearing, the parties or their
lawyers often submit briefs containing their factual and legal arguments.
After any pre-hearing motions are decided, the parties or their
representatives make opening statements, and the claimant puts forth
his case much like he would in court, calling witnesses, testifying, and
offering exhibits. As in a trial, all parties have the right to cross-examine
each other's witnesses, and, the arbitrators may ask their own
questions. Again the process is less formal than, but similar in nature to,
a trial. Please contact us for assistance in these matters if you feel that
you have been subject to fraudulent financial management.
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703 Market Street, Suite 1109 San Francisco, California 94103
Telephone: 415-543-6462 Toll Free: 866-948-3773 www.guerrerolaw.net
Privacy Policy Copyright © 2005 - The Guerrero Law Firm
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