When Is It Necessary To Hire A Stockbroker Fraud Lawyer?

Trusting a stockbroker to manage your investments comes with the expectation that they will act in your best interest. Unfortunately, this is not always the case. Stockbroker fraud, while regulated, still occurs far too often.

If you have suffered significant financial losses due to potentially illegal actions taken by your stockbroker, you may have cause to pursue legal action. But when is it truly necessary to hire a stockbroker fraud lawyer specializing in stockbroker fraud cases?

Intentional Misconduct

If you have evidence showing your stockbroker intentionally mishandled your funds or investments for their gain, you need a lawyer. Situations, where a stockbroker converts client funds for themselves or churns an account to generate higher commissions, are clear acts of intentional fraud and misconduct. An experienced stockbroker fraud lawyer can help you build a strong case and fight to recover your losses.

Unsuitable Investments 

Another sign you need to consult a lawyer is if your broker placed you in investments that were far too risky for your goals and risk tolerance. Stockbrokers have a fiduciary duty to only recommend suitable investments. If your broker violated this duty by putting you in investments you didn't fully understand or that exposed you to inappropriate levels of risk, you may have grounds for legal action.

Failure to Diversify

Maintaining a properly diversified portfolio is key to smart investing. If your broker failed to diversify your holdings and you suffered major losses when concentrated positions declined, their negligence may rise to the level of stockbroker fraud. A lawyer can assess if the lack of diversification constitutes a breach of fiduciary duty.

Unauthorized Trading

Every trade a broker makes in your account should be authorized by you. If you notice unauthorized trades were made without your permission, resulting in losses, immediately contact a stockbroker fraud attorney. Unauthorized trading is against the law and you may be able to recover damages.

Material Misrepresentations

Another time to call a lawyer is if your broker lied to you about an investment or failed to disclose risks. Intentionally providing false or misleading information is unlawful. If you invested based on misrepresentations made by a broker and endured losses, an attorney can fight on your behalf.

Excessive Trading

When a broker trades excessively in your account simply to generate more commissions, it's known as churning. This common act of stockbroker fraud should be investigated. A lawyer can analyze your trading activity and statements to prove churning occurred and help you seek compensation.

Statute of Limitations

You have a limited window of time to take legal action after broker misconduct. An attorney will know the deadlines and work quickly to prepare your claim. This avoids the potential problem of time barring your case.

When Is It Necessary to Hire a Stockbroker Fraud Lawyer? Closing Thoughts