Types of Claims

Securities Fraud

Securities fraud may be generally described as conduct that induces an investor to make a purchase or sale or other investment decision on the basis of false or misleading or omitted information. Such practice is often a violation of federal and state securities laws, as well as the rules and regulations of FINRA, the SEC and other self-regulatory authorities. Securities fraud, also commonly known as investment fraud, stockbroker fraud, and stock fraud, frequently results in monetary losses that can only be recovered through negotiation, dispute resolution, or litigation.

Generally, the main component in securities fraud is deception, misrepresentation, and/or omission of material facts. However, FINRA has established many distinct duties owed by stockbrokers to public investors, including the duty to only recommend suitable investments and strategies, and to always and only deal with the public fairly and in good faith. When your financial professional either violates state or federal law, or violates the rules and regulations put in place by the industry (FINRA), they can be held financially responsible for your losses and/or damages.

In Texas, or claims that are covered by the Texas Securities Act, the Texas Securities Act is an extremely powerful tool for the investor-claimant. Generally, to be successful under the Texas Securities Act, a claimant only needs to prove there was a misrepresentation or omission of a material fact in connection with the offer or sale of a security or covered investment contract. The Act provides for rescission (undoing the transaction), damages, interest and in appropriate cases a recovery of all costs and attorneys’ fees.

To learn more about the types of claims that may be brought against stockbrokers, click on the links below:

Types of Claims Against Brokers

• Suitability
• False Statements & Omissions
• Unsuitable or Excessive Margin
• Churning
• Unauthorized Trading
• Mutual Fund Fraud
• Selling Away
• Concentration (Lack of Diversification)
• Failure to Follow Directions
• Oil & Gas Securities Fraud
• Stockbroker and Investment Adviser Employment Practice
• Representing Brokers and Advisers Before FINRA, the SEC, and State Regulators

Some Tips to Safeguard Yourself Against Securities Fraud:

Your broker or adviser is required to learn your risk tolerance, investment objectives, and financial condition before making any recommendations. Make sure that your trusted professionals are asking these type of questions—if they are not, they will not have a reasonable basis on which to base a recommendation, and are likely violating applicable rules and putting your investments at risk. In short, they are not doing their job, and you should consult with our firm to determine whether any duties have been breached and whether your broker should be held responsible for any losses or damages. Losing money in investments isn’t necessarily “just how it is.” Investigate further when your broker tries to explain that “everybody lost money” because of the market, etc. Remember, a suitable portfolio will match your tolerance for risk, and the gains or losses from a suitable portfolio may be appropriate in any market cycle.

Secondly, avoid investments that are not fully explained by your adviser. If you don’t fully understand how an investment works, and why the investments is suitable for you, don’t invest in it. If you don’t know how much you have at risk in your portfolio, your broker has failed to properly explain your portfolio.

Lastly, if you suspect that you have lost money through brokerage fraud, misconduct, or mismanagement, please contact the Forman Law Firm, P.C. today for a confidential Free Case Evaluation. Call us at (866) 597-2221, email info@formanlawfirm.com , or fill out and submit our online “Contact Us” form.