Federal Law protects investors from certain illegal Investment Broker/Dealer activities. If you believe you have or may have been the victim of Broker/Dealer violations call the lawyers of the Law Offices of Matt & Allen as soon as possible. Complaints may be made to the Financial Industry Regulatory Authority (“FINRA”), a government-authorized not-for-profit organization that overseas U.S. broker-dealers.
Potential issues that may need to be addressed:
- Slow execution or execution of investment orders at an unanticipated price or failure to execute a buy or sell order. There is a prohibited conduct which includes recommending the purchase or sale of a security that is unsuitable given the customer’s age, financial situation, investment objective and investment experience. Investment in a particular security may be unsuitable or the amount or frequency of transactions may be excessive and therefore unsuitable. (https://www.finra.org/investors/learn-to-invest/choosing-investment-professional/prohibited-conduct);
- Purchasing or selling the security without customer authorization. The broker/dealer must have written discretionary authority to effect transactions in the account or was given discretion as to price and time. Absent this authority in writing a cause of action could lie.
- Switching a customer from one mutual fund to another without a legitimate investment purpose.
- Misrepresenting/failing to disclose material facts about an investment; this should include the risk of investing in a particular security as well as the charges or fees involved. It may also need to include the company’s financial information, technical analysis or bond ratings.
- Removing funds from the customer’s account without authorization.
- Charging a customer excessive mark-ups or mark-downs or commissions on the purchase or sale of stock.
- Guaranteeing a customer they will not lose money on a particular transaction or making a specific price prediction or agreeing to share in any loss in the customer’s account.
- Private security transactions between the broker and the customer that violate FINRA rules; particularly the transactions done without the knowledge or permission of the broker’s firm.
- “Trading ahead” – trading for the firm before entering the customer’s limit order without having a valid exception.
- Failure by the market maker to place a customer limit order.
- Failure to uses reasonable diligence to see that the client’s transaction is executed at the best price given prevailing market conditions.
- Purchasing or selling stock while in possession of material, non-public information about an issue.
- Using manipulative, deceptive or other fraudulent methods to effect the transaction or induce the purchase or sale of a security.
Liability often occurs when there is an unregistered or complex security that is sold. (e.g. a REIT or an unlicensed investment in some “deal” or small business). The more complex a financial transaction the more likelihood it gives rise to a claim.
If you believe you have or may have been the victim of Broker/Dealer violations call the lawyers of the Law Offices of Matt & Allen as soon as possible.
