The law firm of Epperly & Follis, P.C. concentrates in cases against major defendants, including corporations and brokerage firms. Most stockbrokers are honest individuals who follow the rules of the securities industry, but unfortunately, there are some unethical and dishonest brokers.
If you have invested in securities (stocks, bonds, options, limited partnerships, mutual funds, certain commodities, etc.) and you have experienced problems with your investments or your stockbroker, you may be the victim of securities fraud. Securities Fraud involves deceptive actions and schemes that are carried out to cheat or take advantage of investors. At Epperly & Follis, P.C., our attorneys are familiar with the financial damage that investor fraud can cause. You must know your rights so that you have the opportunity to recover your losses from your stockbroker or brokerage firm.
Most victims of securities fraud do not even realize that they have been defrauded until they have already suffered financial losses. Fortunately, even after losses have occurred, the law still provides a mechanism for investors to recover their losses which were caused by a stockbroker's abuse of the account. Investors may be entitled to compensation for the loss of income that their investments should have been generating, interest on losses and legal fees.
There are several ways in which an investor can be defrauded:
- Churning, also known as Excessive Trading, occurs when a broker executes an excessive number of trades on an account in order to earn the commissions paid on each trade.
- Unsuitability Trading and "Know Your Customer" Rules. Suitability rules in investing require that a broker make investment choices that they know are conducive to the needs of their client. Closely related are the "Know Your Customer" Rules, which require a broker to fully understand the wants and needs of their client. If your broker does not perform according to these rules, they may be liable for your losses.
- Over-concentration occurs when the broker puts the majority of the client's investment into one area, rather than diversifying the client's portfolio, and then the value of the investment declines significantly.
- Unauthorized Trading/Failure to Execute Order. An investor must approve each trade before the trade takes place. It is unethical to execute trades without the consent of the client. It is also the broker's responsibility to execute trades in a timely fashion. If a broker executes a trade without your permission, or refuses or delays a sell order, you have a case for recovering your financial losses.
- Investment Misrepresentation or Fraud occurs when a broker misrepresents a stock to the client, or omits vital information in order to encourage them to purchase certain stock. Stockbrokers who purposely omit information with the purpose of misleading their client are as liable as those who give false information to their clients. A broker has the responsibility to disclose all risks of a stock.
- Insider Trading/Front Running. It is against the rules and regulations of the securities industry to enter into any securities transactions while in possession of nonpublic information. If your broker does this, they are breaking the law.
- Touting is when a stockbroker misrepresents, or fails to disclose, material facts of a "house stock" that they are trying to sell to their client. If your broker performs in this way, they may be liable to you for your financial losses.
As an investor, you should be proactive, and always be aware of the actions your broker is taking when managing your account. There are several warning signs of fraud that you should look out for:
- Inconsistency between the broker's verbal statements and the performance of the investments.
- Misrepresentations about an investment; failing to disclose risks.
- Excessive trading on the account.
- Trading in high risk, speculative or unsuitable investments.
- Trading in securities and strategies without first properly educating the client.
- Trading without proper and prior authorization.
- Trading in low value securities or obscure companies on foreign exchanges, or private investments.
- Unresponsive to complaints by the client.
- Repeated promises by a broker to make up for losses.
- The loss of funds or value of an account that the broker cannot explain.
If you think that you may have been defrauded, you should take immediate action to protect yourself and your investments. First, stop all trading with your broker until your concerns are resolved. Second, write a letter of complaint to your broker and his supervisor, or request a meeting with the brokerage firm manager. Finally, consult with a qualified attorney and have the account documents reviewed to determine whether you have been the victim of securities fraud. Epperly & Follis, P.C will outline the documentation required, the decisions that must be made, and will continue to guide you through the legal process.
Epperly & Follis, P.C lawyers know the law and victims' rights. We can help you make informed decisions regarding your situation. Our legal professionals do not approach our cases as mere jobs, but as causes in which larger issues are at stake - causes in which the firm's lawyers invest personal dedication to see that justice is done. If you or someone you love has been a victim of securities fraud, please call us at 1-888-703-0109 or (804) 648-6480, or contact us via our online Contact Form.