Types of Stock Broker Fraud

The stock market is a very important part of the economy, with people buying these securities as a way of making money for retirement and other important uses. Although it is natural for the stock market to fluctuate, fraudsters can manipulate the market so that other people suffer the consequences when stocks crash. There are several different types of stock fraud that can affect you and your loved ones.

With the passage of the Dodd-Frank Act, the U.S. government is cracking down on securities fraud that can negatively affect an already struggling economy. If you are aware of any stock fraud or securities fraud, you should use this information to help the government stop the crime. Contact a practiced Qui Tam attorney from Tycko & Zavareei, LLP today at 202-973-0900 to discuss your legal options.

What is Stock Fraud?

Securities fraud can take the form of insider trading, Ponzi schemes, and other market-manipulation techniques. However, stock broker fraud occurs when a broker mismanages a stockholder’s portfolio. Stockholders entrust their finances to a broker, who can then buy, trade, and sell stock with complete disregard for the stockholder’s financial stability. Types of broker-manipulated stock fraud include:

• Churning – excessively trading stocks so that they can earn more commission
• Misrepresentation – misleading a stockholder to think that a securities purchase is safe and beneficial
• Omission – leaving out key stock information to mislead stockholders
• Overconcentration – failing to diversify the stockholder’s portfolio
• Unsuitability – choosing stocks that are not within a stockholder’s risk range

This can rob you of your hard-earned finances, and it can lead to the downfall of many people’s stock portfolios. Broker-induced stock fraud is unacceptable and should not go unpunished.

Contact Us

Brokerage fraud is not the only type of securities fraud that can affect your financial safety. If you are aware of Ponzi schemes, insider trading, or other types of securities fraud, you can use this information to help the government built a case against the fraudster, stop the crime, and protect other innocent victims. To learn more about your responsibilities, contact a knowledgeable Qui Tam lawyer from Tycko & Zavareei, LLP at 202-973-0900 today.