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The Financial Industry Regulatory Authority (FINRA), the biggest independent
regulator for all U.S. securities firms, frequently receives complaints
from investors. These investor complaints range from grievances against
brokers to the investment firms that employ them.
There are numerous types of
investment fraud and
stockbroker misconduct claims, but according to FINRA, there are four problems that are most
often reported, including:
Misrepresentation: This occurs when a broker intentionally misrepresents material facts or
omits material information. Misrepresentation often arises with risky
or volatile securities. The investor may not discover that the material
facts and information where omitted or misrepresented until after he or
she loses money or can’t liquidate the investment.
High-Pressure Sales Calls: Brokers are salespeople and some of them are more aggressive than others.
According to FINRA, “high-pressure sales calls occur when an investor
receives unsolicited or unwanted phone calls using high-pressure, persistent
tactics, soliciting the purchase of securities.” This practice is
also referred to as cold calling and generally involves low-priced, speculative
Unsuitability: This problem arises when a broker recommends an investment that does not
coincide with the investor’s objectives, financial situation or
risk tolerance. For example, a broker could be liable for losses after
suggesting an investment that is high risk, when the client has made it
clear that he or she is living on a fixed income and has a low risk tolerance.
Unauthorized Trading: Unauthorized trading refers to the “sale or purchase of securities
without the investor’s prior knowledge and authorization.”
It can happen with any security.
If you have a complaint against your broker, you might consider arbitration
or mediation to recover your losses. In addition, you can file a complaint
with FINRA but it is important to understand that FINRA does not recover
losses for investors.
For more information regarding your options, contact an experienced securities
fraud attorney at Meyer Wilson. We are a nationally recognized
law firm that represents individual and institutional investors in securities
arbitration, mediation and litigation.
Call us toll-free or
fill out our contact form to obtain your free case evaluation.
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