Four Common Investor Problems Reported to FINRA

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 securities.

  • 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.