David Meyer & AssociatesRepresenting Individual Investors and Consumers Against Corporate Misconduct
What are some examples of the most common types of stockbroker misconduct?

Explained in this section are some of the most common improper investment tactics of which investors and their trusted advisors should be aware.
This list is not all-inclusive but is intended primarily to assist investors in recognizing whether they may be able to recover some or all of their losses. Consultation with an attorney experienced in securities arbitration matters is recommended for those who believe they may have suffered losses as the result of stockbroker misconduct.

 Unsuitability
 Breach of Fiduciary Duty
 Churning
Unauthorized Trading
 Misrepresentations/
   Omissions
 Overconcentration
 Fraud or Theft
 Failure to Supervise
 Registration Violations

Fraud or Theft


The most blatant of unlawful tactics is fraud or outright theft by a broker. An example of theft is the case where the broker instructs an investor to write a check payable to the broker personally or to a company other than the brokerage firm, and the money never reaches the investor's account. Investors should take all possible precautions when seeking the assistance of a broker, including checking the broker's and the brokerage firm's credentials.

Failure to Supervise

A brokerage firm must supervise its individual brokers and their recommendations to investors to ensure compliance with and prevent violations of the rules of the securities industry, or risk liability to the investor.

Registration Violations

Under federal securities laws and state "blue sky" laws, brokers and brokerage companies must be registered to sell securities to residents of their states. In addition, most states require that the securities sold to their citizens be registered or properly exempt from registration.