What are Examples of Broker Misconduct?

When you’re investing, you expect your broker to make wise decisions with your money. There are some cases, however, where brokers will do the opposite.

If you suspect broker misconduct, you’ll want an experienced team to represent you. At Weltz Law we have your best interests at heart and will fight to get your hard-earned money back.

Examples of Broker Misconduct

Breach of Fiduciary Duty

A fiduciary duty is an obligation of a person to act in the best interest of their client—most importantly, putting the client’s interests ahead of their own. Brokers owe a fiduciary duty to their clients. Additionally, brokers must share any important information related to a transaction and not hide information that doesn’t match the client’s goals.

Account Churning/Overtrading

When a broker buys or sells securities for the client, the broker usually earns a commission. Overtrading, or account churning, is when the broker continuously trades just to earn a commission. This process is not only unethical but also against federal rules and regulations.

Failure to Supervise

The FINRA (Financial Industry Regulatory Authority) specifically states that there must be supervision of brokers at a brokerage firm. If a broker is found to be noncompliant with security regulations and laws, then the brokerage firm may be held accountable for negligence.

Solicited and Unsolicited Trades

A solicited trade is usually initiated by the broker, whereas an unsolicited trade is typically initiated by the client. If the broker marks the trade as unsolicited when it wasn’t, that could be a case of fraudulent activity.

Unauthorized Trades

While a broker makes trades on your behalf, they are not allowed to make trades to non-discretionary accounts without your permission. A broker must have written permission from the client to make a trade to a non-discretionary account.

The actions above are just a few examples of broker misconduct. If you suspect broker misconduct, you’ll want to contact an attorney right away to help recover your losses. Contact Weltz Law for a free consultation today.