When most people think of “Malpractice”, the initial thought is almost always along the lines of “Medical Malpractice”. While that is certainly one of the most common forms of malpractice in many legal affairs, there are other types of malpractice which may cause you some serious difficulties that are outside of your control. One such example is Stock Broker Fraud and Misconduct.
When you entrust a professional with something as important as your investment portfolio, you aren’t only trusting them with your money, you may be trusting them with your retirement, and potentially even your legacy. Having a trustworthy Stock Broker is imperative and it is critical that you maintain a vigilant watch over your finances and your broker’s activities.
Remember – your stock broker’s actions, if questionable, may not only cost you money – they may inadvertently draw you into legal consequences along the way. Unfortunately, any finance business has a potential for plundering. While it is true that many unfavorable dealings with stock brokers are innocuous, accidental or otherwise nothing more than human error, some misfortunes are not so innocent in nature. If you suspect your stock broker of anything illicit, ranging from simple misconduct all the way up to outright malicious fraud, you should obtain legal counsel right away.
Hopefully, however, you have done your due diligence in vetting your stock broker as a proper professional and a trustworthy asset to your investment strategies. Still, it might not be all too easy to see the red flags popping up that should indicate potentially fraudulent activities being conducted by your stock broker. So we’ve compiled the following brief list of a few signs to watch out for that may indicate Stock Broker Malpractice.
Declining Investments and/or Returns
Perhaps the first red flag most people notice about their Stock Broker is an overall decline in their investments and returns. If you start to see unfavorable results consistently from your broker, it’s definitely time to investigate further. Obtain legal counsel and start looking into your portfolio and the broker’s dealings.
Hopefully, the decline can be mitigated swiftly and you may simply need to part ways with your stock broker in favor of another strategy of your own devise.
“Guarantees” and Similar Promises
Another red flag, although a common one and often overlooked, is the promise of high returns or anything that seems too good to be true (hint: it usually is). Watch out for the word ‘Guarantee’, as it almost never amounts to anything but disappointment in the end.
Significant Losses on Low Risk Investments
If you’re playing it safe with lower risk investments with a trade-off of more gradual returns, you shouldn’t be losing out on your investments, especially over the long term. If you start to see deep dives on your returns from low risk investments, it’s time to investigate your stock broker more thoroughly. Consider hiring legal counsel and get a good look at those books.
Lack of Information & Poor Visibility
If you find it difficult to get clear answers from your stock broker about how your investments are doing, or if you go long periods of time without reports, that’s a big red flag. You should also have complete, unmitigated visibility on your broker’s dealings, your investments, returns and the entirety of your portfolio and long term strategies.
If at any time it becomes a hassle to get the information you need, or simply cannot access it for any reason, it might be time to hire a malpractice attorney. At the very least, you may need to dismiss your Stock Broker.
Frank Cristiano is a Legal Industry Blogger and Denver Malpractice Attorney