Stockbroker Fraud and Broker Misconduct: Expert Legal Representation

Hire a reputable and trusted stockbroker fraud lawyer at Patil Law LLC if you or a loved one has suffered financial losses from broker misconduct or fraudulent broker activities. An attorney who represents you during these complex securities litigation proceedings can provide experience, direction and advice when confronting broker misconduct.

Brokerage firms have ruthless legal teams to defend misconduct cases, so it’s best to hire experts on your side who are equally eager to fight for your cause. Our firm’s founder, Chetan Patil, has over 15 years of extensive experience in diverse, complex disputes and transactions involving broker misconduct across the country.

Why Choose Patil Law for Broker Misconduct Claims?

Patil Law’s clients benefit from the depth and breadth of Chetan’s legal experience and judgment in securities and investment fraud cases. He has handled and overseen over a thousand litigation and arbitration cases nationwide involving broker misconduct in federal and state courts and arbitration forums.

To date, Patil Law LLC has recovered over $25 million on behalf of its clients facing broker misconduct and securities fraud. One of the most notable lawsuits involved a $5 million settlement for clients who were improperly sold multiple illiquid Real Estate Investment Trusts (REITs) by their broker and who were victims of forgery. Feel free to read more about the firm’s impeccable track record.

As a testament to our deep care and commitment, Chetan and his team of legal experts travel extensively for their clients confronting broker misconduct all around the country.

We have represented defrauded investors, family trusts, family offices, public and private companies of all kinds, including banks and other financial institutions, broker-dealers, registered investment advisors, advisory firms, and securities brokers who have faced misconduct from other industry members.

We operate on a contingency fee basis. With this type of arrangement, we only get paid if we secure a favorable settlement or verdict for our clients experiencing financial losses from broker misconduct. Call Patil Law LLC now at (866) 846-0152 or login to send us a message through our secure and confidential online form. Our compassionate team of professionals is always on standby to provide urgent assistance regarding broker misconduct claims

What Is Stockbroker Fraud and Broker Misconduct?

Every year, thousands of U.S. investors lose money to fraud and other securities law violations. In particular, stockbroker fraud or securities fraud is the misrepresentation or omission of information by a broker to induce investors into trading securities.

Broker misconduct occurs when a broker or advisor engages in unethical, deceptive, or illegal practices that cause financial harm to their clients. These actions essentially breach the trust placed in them and violate their fiduciary duty under FINRA rule and SEC regulations. Brokers must follow specific rule requirements regarding proper investment recommendations and account management.

Common Types Of Broker Misconduct and Broker Fraud

Broker misconduct can take many forms, and it’s essential for investors to be educated about the common types to recognize when they should seek legal advice:

Churning: Excessive Trading by Securities Brokers

This occurs when a broker excessively trades in a client’s account to generate higher commissions for themselves, disregarding the client’s best investment objectives. This type of broker misconduct drains accounts through unnecessary transaction costs. Learn more about Churning (Excessive Trading): Proving Broker Control and Excessive Activity to understand how to identify this misconduct

Conversion of Funds by Brokers

This type of broker misconduct occurs when a stockbroker misappropriates or illegally converts a client’s funds for their own personal use rather than investing them as intended. This misconduct often involves the broker taking capital directly from client accounts.

Insider Trading: Serious Broker Misconduct

When a broker uses non-public information to make investment decisions or shares such information with others for personal gain, it constitutes insider trading and is illegal. This broker misconduct violates securities regulations and can lead to severe penalties.

Misrepresentation or Omission by Investment Brokers

Brokers are required to provide their clients with accurate and complete information about investments. Misrepresenting or omitting material facts to influence investment decisions is a serious form of broker misconduct that violates FINRA rule requirements. For more information, visit our guide on Misrepresentation and Omission by Brokers: Elements of Successful Claims which outlines what you need to prove your case.

Over-concentration (Failure to Diversify): Green Investment Warning Signs

This broker misconduct happens when a broker invests a significant portion of a client’s portfolio in a single security, sector, or asset class (including “green” investments that may be unsuitable), exposing the client to excessive risk. Proper securities investment requires appropriate diversification based on client needs.

Margin Abuse by Stockbrokers

Brokers may encourage clients to borrow money to invest (known as “buying on margin”) without fully explaining the risks involved. Misusing margin accounts or failing to disclose the associated risks is fraudulent broker conduct that can amplify financial losses.

Ponzi Schemes

In this type of fraud, a stockbroker promises high returns to investors but uses money from new investors to pay off earlier investors, creating an unsustainable cycle that inevitably collapses.

Pump and Dump Schemes

In this form of broker misconduct, unscrupulous brokers artificially inflate the price of owned securities through false statements, then sell their overvalued shares at a profit. This market manipulation often leaves other investors with significant financial losses when the securities’ prices fall. Our resource on Pump and Dump Schemes: Market Manipulation Detection and Remedies provides guidance on recognizing and addressing these scams.

Unauthorized Trading: Serious Broker Misconduct

When a broker makes trades in a client’s account without obtaining prior consent or authorization, it is considered unauthorized trading and is a clear violation of the client’s trust and confidence. This misconduct violates fundamental securities rules governing broker conduct. Check out our guide on Unauthorized Trading: Documentation Requirements and Legal Remedies to understand how to document and address this issue.

Unsuitable Investments by Securities Brokers

Brokers have a duty to recommend investments that align with their clients’ risk tolerance, financial goals, and investment objectives. Recommending unsuitable investments that are too risky or complex for a particular client is a common form of broker misconduct that can lead to significant financial losses.

If you suspect that you have been a victim of stockbroker fraud or broker misconduct, it’s crucial to seek legal guidance from experienced professionals. At Patil Law LLC, we have a deep understanding of the complex laws and regulations surrounding the different types of investment fraud and broker misconduct, and we are committed to fighting for the rights of our clients

How Can You Prove Broker Misconduct?

Proving broker misconduct requires meticulous documentation. Start by collecting all relevant files concerning the broker fraud in one secure place. It’s best to prepare the following information:

• A contact sheet of your broker’s name, mail and email addresses, telephone numbers, and website address, as well as their purported regulatory registration numbers
• A timeline of events involving broker misconduct, which may span many years
• The police report documenting broker fraud, if any
• Your most recent credit report from all three credit reporting companies
• Any evidence of broker misconduct, fraud or deception
• Logs of any phone conversations with brokers, with dates, names and phone numbers of any representatives with whom you spoke, and notes on what information they gave you
• Account statements showing unusual trading patterns by your broker
• Any other relevant documentation concerning the broker misconduct

Reporting Broker Misconduct to Regulatory Authorities

As soon as you’ve confirmed that your broker has performed fraudulent activities or engaged in misconduct, you can also report them directly to regulators. These include:

• The U.S. Securities and Exchange Commission: (800) SEC-0330 or file a complaint.
• FINRA: Login to their online portal to report broker misconduct.
• National Association of Insurance Commissioners: Report fraud or file a complaint to your state commissioner

Securities Litigation for Broker Misconduct

When broker misconduct causes significant financial losses, securities litigation may be necessary to recover your investment capital. Our firm specializes in representing clients through all phases of securities litigation related to broker misconduct, from initial case evaluation through trial or settlement.

Our experience in securities litigation includes:

• Comprehensive case evaluation to determine the strength of your broker misconduct claim
• Strategic preparation of compelling legal arguments based on specific broker misconduct
• Effective negotiation with brokerage firms and their legal teams
• Aggressive trial representation when broker misconduct cases cannot be settled favorably

Investor Education: Protecting Yourself from Broker Misconduct

At Patil Law LLC, we believe investor education is crucial to preventing broker misconduct. We provide resources to help clients recognize warning signs of broker fraud and understand their rights under securities regulations. Be especially wary of Cold Calling and Boiler Room Operations: Legal Response Strategies which are common tactics used by unscrupulous brokers to pressure investors into making hasty decisions.

Another deceptive practice to watch for is Trading Ahead and Front-Running: How to Identify and Address Illegal Broker Activities, where brokers prioritize their own trades before executing yours, often at your expense.

By understanding the rules that govern broker conduct, investors can better protect themselves from potential misconduct. For more information about stockbroker fraud and broker misconduct or to discuss your potential case with one of our experienced securities attorneys, please contact our office today.