Americans are extremely interested in the market for stocks. In fact 55 percent of Americans have stocks that are owned by individuals or mutual funds in addition to equity investments in their 401(k)s and IRA’s that account for about 300 million people! It’s not surprising considering it’s one of the ways to make your money grow faster than other types. But the controversy surrounding this practice has arisen from fraud in the form of theft, corruption, and improper activity by those who work for brokerages.
Trends are Growing
Financial professionals were shocked to learn that prominent brokers had been accused of bilking clients. What are your investments’ security? To comprehend the level of protection an individual investor enjoys from fraud, it’s necessary to understand the various types of duties that a stockbroker performs towards his/her customers.
It was shocking for us all to learn that the top figures in the industry were routinely taken through prison on accusations of fraud and bribery. But justice will prevail.
Financial relationships can be a bit complicated. The concept of “fiduciary obligation” or “fiducia rights” refers to a person who manages funds for an individual as their guardian and agent, until they are able safeguard themselves against danger. This is above friendship, but isn’t necessarily protected by law. The situations that arise are not common however.
They are often partnered with financial advisors when it comes down to more complicated crimes or lawsuits that could affect the registered representatives. Although advisers are required to make plans for your financial future, rather than trade securities, fiduciary obligations apply to these advisers. This doesn’t mean they don’t need to be vigilant. Stockbrokers may still face civil or criminal actions for their conduct; however, it is a slight difference regarding how these incidents arise due at least partly because of their clearer definition than what we see when dealing with brokerages that don’t have a policy dedicated entirely towards protecting clients’ interests as proportional thirds entities.
What is Fraud?
The term “broker fraud” is a catchall for the instances when an advisor crosses the line and commits a variety of forms of misconduct including lying or deceit, theft (of assets of clients) and illegal transactions like poor investments, which cause greater losses than if they’d not been made in order to earn commissions for himself, rather than putting the interests of clients first, as the other professionals you deal with. Churning is excessive trading that brokers engage in to earn more profit. It’s a means to lower their overall expenses and offer no added value.
When a person invests in a venture and then is unable to save or retire funds due to misconduct or fraud, they can pursue a claim for compensation. Because investors are forced into arbitration with binding clauses that hinder them from taking their case into actual court most cases involving lost money get resolved by having lawyers fight over what’s left instead of having lengthy procedures under oath so that everyone hears you screaming.
For more information, click investment fraud attorney