For many people, the phrase “securities fraud” is synonymous with Bernie Madoff, the man who ran a multi-billion dollar Ponzi scheme that resulted in thousands of people losing their investment funds. In truth, securities fraud encompasses much more than the stereotypical boiler room: it is any act by a broker, advisor or investment firm that leads an investor to make purchases or sales based on false or incomplete information.
As an investor, you have options when your stock broker “steals” your money, either through willful and malicious actions, or through negligence. You can pursue a claim for damages in the civil court system, through settlement negotiations, or through FINRA arbitration proceedings. Regardless of whether or not the government levels federal criminal charges against the individual or the firm, you can still make a claim to recover your losses.
The Investor Bill of Rights
One or the best ways, of course, to avoid being a victim of securities fraud is to know your rights before you begin investing. The Investor Bill of Rights says that you can:
- Ask for and receive information from a firm about the work history and background of the person handling your account, as well as information about the firm itself.
- Receive complete information about the risks, obligations, and costs of any investment before investing.
- Receive recommendations consistent with your financial needs and investment objectives.
- Receive a copy of all completed account forms and agreements.
- Receive account statements that are accurate and understandable.
- Understand the terms and conditions of transactions you undertake.
- Access your funds in a timely manner and receive information about any restrictions or limitations on access.
- Discuss account problems with the branch manager or compliance department of the firm and receive prompt attention to and fair consideration of your concerns.
- Receive complete information about commissions, sales charges, maintenance or service charges, transaction or redemption fees, and penalties.
- Contact your state and provincial securities agency in order to verify the employment and disciplinary history of a securities salesperson and the salesperson’s firm; find out if the investment is permitted to be sold; or file a complaint.
Every investor in the country has these same rights. Knowing what they are form the start will help you make smart decisions about your investments, and tell you what questions you should be asking when you work with an advisor or broker.
If you are just starting down the path of investment your money, or if you are considering switching brokerages, you should do your due diligence first. FINRA offers a tool called BrokerCheck® that allows you to see how long your new broker has been licensed, what kind of disciplinary actions may have been taken against him/her, whether or not her or she is registered to sell securities at all, and so forth.
If you have sustained financial losses related to securities fraud or stock broker negligence, The Frankowski Firm can help. We are an experienced team of broker negligence attorneys who handle complex cases throughout the country. To learn more about our services, or to schedule a consultation, please call 888.741.7503, or fill out our contact form.