Lawyers For Bad Investment Advice | Unethical Actions by Stock Brokers
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Securities brokers, investment advisors, and other financial industry professionals who give bad investment advice or engage in illegal or unethical conduct in their dealings with clients cost investors millions of dollars each year. Brokers who invest their clients in overly risky or unsuitable investments or violate federal laws or industry ethical standards may face civil or criminal penalties. In many cases, defrauded investors are able to recover their financial losses by taking legal action against the broker or the brokerage firm that employs them.
Unsuitable Investments Lawyers
Stock brokers are required to investigate a client’s individual financial situation and take into consideration several factors before determining whether an investment opportunity is suitable for the client. The use of unsuitable investments is a common complaint about brokers from clients who see their investment accounts drained by overly risky investments they did not understand.
Brokers should always consider the client’s previous investment experience and tolerance for financial risk in recommending investment opportunities. Several factors should be evaluated to determine whether a particular investment is suitable for a client, including the client’s:
* Other sources of income
* Liquid net worth
* Educational level
* Understanding of risks
* Other investments and debt
* Financial needs
Other Investment Risks
Investors may also be defrauded by stock brokers and financial advisors who engage in illegal or unethical activities in the handling of client investment accounts. Investors may find their investment accounts are being mishandled by unscrupulous advisors who do not have the client’s best interests in mind. Broker misconduct most commonly consists of:
* “Churning” a client’s account with unnecessary activity in order to earn commissions
* Failure to diversify the client’s portfolio
* Making unauthorized trades
* Sale of variable annuities to clients who are not good candidates for the investments
* Abuse of margin accounts
* Brokerage firm’s failure to properly supervise its brokers
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