Types of Securities Fraud

Broker Misconduct

Although there are plenty of ethical brokers out there, others choose to break their ethical and legal obligations towards customer, exposing you to loss and the broker and his/her firm to damage liability. Some of the most common examples of this are margin trading, misleading illustration, and unsuitable investments.

Equity Indexed Annuities

Before an agent talks you into buying a new product, he or she should be upfront about the benefits and claims associated with this product. Unfortunately, too many investors purchase indexed annuities with the belief that they cannot lose their principal. If a broker has misled you, you may have a legal claim.

FINRA Arbitration

There’s some level of risk inherent in every investment. But if you lost money on your investments because of something that your broker did wrong, you may be able to file a complaint with the organization that governs brokers: the Financial Industry Regulatory Authority (commonly called “FINRA.”)

Hedge Fund Abuses

Hedge funds are complex vehicles that may lead investors to believe they have little protection. Sometimes a hedge fund manager may be dishonest about his or her qualifications or background, past situations involving theft from hedge funds, or performance of the funds.

Investment Advisor Misconduct

Investment advisers may engage in one or more of the following problematic behaviors: failing to test for suitability, churning, or making unauthorized changes to a client’s portfolio.

Misrepresentation / Omission of Facts

Whenever an advisers or broker shares an investment opportunity with you, all necessary facts must be provided so that you can make an educated decision. Unethical brokers, though, might try to avoid giving you all the facts, and this may qualify as grounds for a claim against this individual.

Opt Outs from Class Action Litigation

If any financial institution such as a securities firm engages in misconduct broadly, an investor might bring forth a class action lawsuit. If your losses are large, however, you should think carefully about joining a class action. You may be better off in your own case after consulting with an attorney.

Put and Call Options

There are many different terms involved with buying and selling investments. It’s your brokers job to explain to you the most pertinent facts so that you can make an informed decision. There are varying levels of risk associated with different types of options, but your broker can be liable if he or she makes an unsuitable recommendation that leads to serious losses for you.

Outside Money Managers

Deciding the investment firm to work with was likely a process that involved you respecting the company name. That’s why it can be a shock when you learn that the broker has given your business to an outside money manager. Without knowing this, you might not realize that you can go another route and avoid all the fees associated with the outside money manager.

Structured Products

The potential with a structure product is typically the possible upside, but a broker who leaves out the significant downsides is doing you a disservice. A broker like this will skip over the fact that these products typically have a lack of liquidity, high market and credit risks, and costly expenses. If your broker has recommended a product like this to you and it’s an unsuitable investment, you may have grounds for a claim.

Variable Annuities Sales Misconduct

Variable annuities on their own are not a terrible product, but they are not the right fit for everyone. A broker who has swayed you to purchase one because of the high commissions he/she will receive, however, could be looking at a sales abuse claim.

Variable Universal Life Sales Misconduct

If a broker presents you with an illustration promising a lot of cash value in a product like this, you should be wary. Unfortunately, not all agents selling these universal life insurance policies will be so forthcoming about the reality of smaller returns in these products. If you’ve fallen victim to false claims, you need the advice of an attorney.