Americans are deeply invested in the stock market. In fact 55% of Americans have stocks that are owned by individuals or mutual funds along with equity investments in their 401(k)s and IRA’s which accounts for around 300 million! This shouldn’t be surprising since it’s one of the ways to make your money grow more quickly than other types. But, the controversy that surrounds this type of investment is due to fraud, theft, corruption, and improper conduct by people employed by brokerage companies.
A Growing Trend
High-profile brokers were sent to jail for bilking customers. This shocked the financial world. Everybody has the same question how secure are your investments? You must be aware of the different duties that a stockbroker has towards his/her clients in order to determine how much security an investor can afford against misdeeds.
It was shocking to us all that the top figures in the industry were routinely detained on allegations of fraud and bribery. But justice will prevail.
Legal Responsibilities
The world of financials can be complex and there are many relationships between people. The concept of “fiduciary obligation” or “fiducia rights” is a reference to someone who manages money for another person as their guardian and agent, until they are able defend themselves from damage. This position is above friendship but not necessarily guaranteed under law. These kinds of situations are very rare however.
When it comes to more complicated crimes and lawsuits that could befall an registered representative and their clients, they’re often partnered to financial advisers. Advisors have fiduciary responsibilities which include planning your financial future and not just trading securities. But this does not mean that you should ignore them. Stockbrokers still may face criminal charges or civil actions for their conduct; however, it tends put be slightly different in the way these situations arise due at least partly because of their more specific definition than what we see when dealing with brokers that don’t hold onto some level that is solely devoted to protecting their customers’ interests as proportional thirds parties.
What is Fraud?
Broker fraud is the umbrella term that refers to advisors who fall in the trap of committing misconduct such as lying or deceitful acts as well as the theft (of client assets) and illegal transactions that could result in higher costs than if they were not made to generate commissions themselves instead of putting clients’ interests first. This is similar to any other professional service company. Churning is the practice of trading excessively that brokers make to make more profit. It’s an opportunity to lower their overall expenses and offer nothing of value.
An individual can file an action for compensation in the event that they have to forfeit their retirement savings or funds because of incompetence, fraud or negligence in an investment. Investors are typically ordered to arbitrate by obligations that stop them from going to the courts. A majority of cases that involve losses of funds are resolved by lawyers fighting over the remaining assets, rather than having lengthy and loud hearings where all can hear the screaming.
For more information, click securities fraud attorneys