Make sure the investment professional and her firm are registered with the SEC and licensed to do business in your state.
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Claims of quick profits & offers to share “inside information,” are Red Flags
Some investments make money. Others lose money. That’s natural, and that’s why you need a diversified portfolio to minimize your risk. But if you lose money because you’ve been cheated, that’s not natural, that’s a problem. Sometimes all it takes is a simple phone call to your investment professional to resolve a problem. Maybe there was an honest mistake that can be corrected. If talking to the investment professional doesn’t resolve the problem, talk to the firm’s manager, and write a letter to confirm your conversation. If that doesn’t lead to a resolution, you may have to initiate private legal action. You may need to take action quickly because legal time limits for doing so vary.
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How To Avoid Problems With Your Broker
Choosing someone to help you with your investments is one of the most important investment decisions you will ever make. While most investment professionals are honest and hardworking, you must watch out for those few unscrupulous individuals. They can make your life’s savings disappear in an instant.
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Make sure the investment professional and her firm are registered
Make sure the investment professional and her firm are registered with the SEC and licensed to do business in your state. And find out from your state’s securities regulator whether the investment professional or her firm have ever been disciplined, or whether they have any complaints against them. You’ll find contact information for securities regulators in the U.S. by visiting the website of the North American Securities Administrators Association (NASAA) or by calling (202) 737-0900. Our publication “Check out Brokers and Advisors” will show you how to research a financial professional.
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Immediately question any transaction or entry that you do not understand or did not authorize
If something is wrong like you see a mistake in your account, Act quickly. Immediately question any transaction or entry that you do not understand or did not authorize. Don't be timid or ashamed to complain. If you can't resolve the problem with your broker or you believe your broker engaged in unauthorized transactions or other serious misconduct, report the matter to the firm's management or compliance department in writing.
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FINRA investigates complaints against brokerage firms.
FINRA investigates complaints against brokerage firms. FINRA and it's employees are empowered to take disciplinary actions against brokers and their firms. Sanctions may include fines, suspensions, a bar from the securities industry or other appropriate sanctions.You Should have a Lawyer to Represent You interests.
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To Sue Your Broker for Damages You Will Need to Provide Infomation
the name of the brokerage firm and the individuals at the firm with whom you dealt; the name of the security or securities that are the subject of your complaint, or a detailed description of the practice or behavior that is the subject of your complaint; the date or dates of the problem activity or transaction;I a detailed description of the events and circumstances surrounding the activity that is the subject of your complaint;
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Broker Misconduct
Recommending the purchase or sale of a security that is unsuitable given an investor’s age, financial situation, investment objective and investment experience. Investment in a particular type of security may be unsuitable, or the amount or frequency of transactions may be excessive and therefore unsuitable for a given investor.
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Switching an investor from one mutual fund to another when there is no legitimate investment purpose.
Switching an investor from one mutual fund to another when there is no legitimate investment purpose underlying the switch.
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Failing to disclose material facts concerning an investmen
Misrepresenting or failing to disclose material facts concerning an investment. Examples of information that may be considered material and that should be accurately presented to investors include the risks of investing in a particular security; the charges or fees involved; company financial information; and technical or analytical information, such as bond ratings.
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Charging excessive markups
Charging excessive markups, markdowns or commissions on the purchase or sale of securities.
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Guaranteeing investors that they will not lose money
Guaranteeing investors that they will not lose money on a particular securities transaction, making specific price predictions or agreeing to share in any losses in an investor’s account.
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Charging excessive markups
Charging excessive markups, markdowns or commissions on the purchase or sale of securities.
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If too much time has elapsed
If too much time has elapsed between a broker’s conduct and your notice for arbitration you may be hindered. In some circumstances, it may be unrealistic to try to begin a case.
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Recovery of Losses
The focus of a FINRA investigation is regulatory in nature, and is designed to determine compliance with industry rules and regulations,
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Having Your Lawyer Bring Your Own Action Against the Broker
You may file an arbitration on your own behalf to recover your loses. This forum handles virtually all securities arbitration claims filed involving customers of brokerage firms and disputes between brokerage firms and their employees. FINRA also offers a Mediation Program, which was developed as an extension of FINRA’s Arbitration Program. Any type of dispute, claim or controversy arising out of your business dealings with a brokerage firm may be resolved in arbitration or mediation
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Investors receive some compensation more than 70 percent of the time
Generally, dispute resolution methods such as mediation and arbitration are faster and less expensive than a state or federal lawsuit. They are also less formal than a court trial. In arbitration cases brought by investors, whether through settlements, decisions by arbitrators or stipulated awards, investors receive some compensation more than 70 percent of the time. In mediation, the overall settlement rate exceeds 80 percent. FINRA arbitrators and mediators are carefully selected from a broad cross-section of people with extensive business or professional experience.
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Other Prohibited Conduct
1. Recommending to a customer the purchase or sale of a security that is unsuitable given the customer's age, financial situation, investment objective, and investment experience. I 2. Purchasing or selling securities in a customer's account without first contacting the customer and the customer did not specifically authorize the sale or purchase, 3. Switching a customer from one mutual fund to another when there is no legitimate investment purpose underlying the switch.
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Suitability and Know Your Customer Rules
New proposed rules. The SEC, FINRA has a proposed rule has a list of nine specific factors to be considered by a member fimi in making a recommendation. This is a significant improvement over the short list of factors contained in current NASD Rule 2310(b). The rule as proposed will provide brokers with a cleat-road map for compiling and analyzing customer-specific information in the course of deciding what recommendations to make to the customer. It is alsohelpful that the mie retains the requirement that representatives take intoaccount any other information which the member firm or representative considers to be reasonable
