If you believe that you have been defrauded of your money by an investment adviser or broker, you should consult with an attorney with experience in securities law. Although investment firms will usually claim that there is a risk in any type of investment, the truth is that there are rules concerning how money can be invested. The following are three situations where you may have a case against an individual broker or brokerage firm who lost a substantial amount of your money.
As you know, brokers make money from commissions. Every time they buy or sell stocks, they make a commission. But there is a limit to how much trading can be done from an individual's account. Excessive trading can erode the investor's initial investment. In some cases, the cost of commissions can create a loss of money that can exceed the loss of a bad investment. This practice is known as churning, and if you believe you have been a victim of it, you should consult with a securities law attorney. There is no set standard for determining whether an investor has been the victim of churning, but an attorney with experience in this area can determine if you have a case.
Too much concentration of your money
In other words, this is putting all of your eggs in one basket. Investment brokers have a responsibility to protect your money as well as invest it properly. Although people have various investment objectives, brokers have an obligation not to place all, or a large part, of an investor's money on a single company. If you lost a large portion of your money because your broker put most of the money on a single company or other investment that resulted in large losses, you may have a case of fraud.
Misrepresentation of an investment
Brokers are in a position to sell investments. A new issuer from a corporation is one example. If a broker misrepresents the risk, yield, or characteristics of the investment and this leads to a large loss, you may have a case. In addition, a broker can be guilty simply by omitting important information to an investor. Naturally, all of this is done to increase the attractiveness of the investment, but it is illegal.
The situations above are only a few of the possibilities of fraud. If you suspect that your investment losses had nothing to do with the normal risk associated with investment, and you suspect that your broker may have done something improper, you need to speak to a securities lawyer. Keep in mind, there are many factors involved that will determine whether or not you have a case against a broker.