How Healthy Are Your Finances?
Get a Financial Checkup
You know the importance of a checkup to your physical health, and that the earlier you identify problems, the earlier you can take action to prevent bigger problems down the road.
The same principle applies to your financial health. If you have investments or a stock portfolio, it is important to actively participate in the management of your accounts, and to maintain regular contact with your broker. By keeping up with your broker on a regular basis, you can increase your opportunity to spot mismanagement or misconduct, and decrease your risk of investment loss.
Recognizing Securities Fraud or Misconduct
Broker misconduct can lead to a substantial loss of your life savings or retirement funds, and it is not uncommon for investors to face financial devastation as a result. Below are several examples of broker misconduct that can lead to catastrophic losses.
- Overconcentration occurs when a financial planner concentrates the bulk of your portfolio in only one or two investments. Diversification of assets is important for the security of your investment.
- Misrepresentation and Omission occurs when a financial planner knowingly gives you incomplete, false or biased information, for whatever reason. It is vital that you have complete information in order to make informed, intelligent decisions about your financial future.
- Unsuitable Recommendations, when made by a broker, can have disastrous consequences. Recommendations from a reputable broker will encourage you to buy, sell or exchange securities that are tailored to your financial needs.
- Churning is when brokers trade excessively in your account in order to generate commissions for themselves. Churning drains your account of its value while lining your broker’s pockets.
- Failure to Execute is when a broker fails to execute your instructions in a timely manner. This can lead to your securities being sold at the wrong time, or being sold at a lower value than expected.
- Selling Away is when a broker recommends that you purchase an investment that has not been reviewed, approved or recommended by the firm. This can be incredibly dangerous for your portfolio, as it exposes you to risks that have not been evaluated by your investment firm.
Protecting Your Financial Health
Any of these examples of securities fraud or misconduct can happen to you, and can cause you to lose much or all of your hard-earned savings and retirement money. And it happens more often than you think. Recently, several well-known and established brokers and investment firms have lost billions of dollars in assets and left their clients dazed and shaken, forced to pick up the shattered remains of their investments.
There are a few things you can do to minimize your exposure to fraud, and to identify it if it has occurred:
- Research your broker’s history
- Make sure your brokerage is licensed by the SEC
- Find out if your brokerage has been investigated by the SEC or a state’s Attorney General for fraud or misconduct
- Conduct your own independent research on investments recommended by your broker
- Request to review your account information to determine if the information about you and your finances is correct
- Monitor the volume of purchase and sale confirmations you have received. An excessive amount could be a sign of overtrading on your account. If you are pressured to buy a particular stock or to invest in a particular security, despite substantial risks, take note. You may be dealing with a less-than-reputable broker.
Is there a Cure for Stockbroker Misconduct?
If you have experienced any of the warning signs above, or if you believe you may be the victim of stockbroker fraud or misconduct, you must act now. Financial planners have well-defined legal obligations to their investors, and our securities fraud lawyers understand those obligations fully. Contact Sokolove Law today to speak with one of our specially trained case managers about your options.