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When you hire a brokerage firm or a broker to manage your investments, there are clear and definite laws which govern the way that management is done. If you find that you’re losing money from your investments in puzzling ways or have any suspicion about the integrity of your broker, please contact one of the experienced Florida securities fraud attorneys at Colling Gilbert Wright & Carter by calling (855) 880-4741. Our securities arbitration and litigation practice is a nationwide practice.
The National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE) both have Suitability Rules which govern the standards a broker must follow when making decisions for you about your investments. We discuss these rules in the sections below.
Your Broker Should Have Basic Information about You
When you begin working with a broker, you would usually give him or her relevant information to help in decision making, such as:
- Your financial status
- Your tax status
- Your investment goals
This enables your broker to make appropriate decisions that match your situation and preferences. If for some reason you don’t give this information, the Suitability Rules require that the broker try to get it from you before starting on any investment activity.
The NASD Conduct Rule 2310 and the NYSE rule 405 both state that the broker should have “essential” or “reasonable” information about a client before making any investments for them, and that if they don’t have enough information about that client, they should use “reasonable efforts” or “due diligence” to get it.
In general, your broker should contact you before making any trade, not afterwards. You can speed things up by signing a written discretion. You can give verbal approval for broker activity (e.g. for timing and price) only as part of a discussion of your whole account. You can’t give generic verbal permission for any future transactions the broker might think of.
What Is Securities Fraud?
It’s an attempt to manipulate the investment market in some illegal way and can be done by private investors, brokers, financial advisors or corporations.
If you lose money on one of your investments, that doesn’t necessarily imply there was any fraudulent activity on your broker’s part. Nobody can read the future and clairvoyantly see what your best transactions should be at any given time. When we lose on the stock market, it’s usually because of trends and market conditions.
Examples of securities fraud include:
- Unauthorized trading
- Failure to diversify
- Breach of fiduciary duty
- Annuities fraud
- Margin trading losses
- Stock market trading losses
- Mismanagement of accounts
If you have reason to think that something illegal was done with your investments, you have the right to file a lawsuit. At Colling Gilbert Wright & Carter, our Florida securities fraud lawyers are ready to help. For a complimentary review of your case, please call (855) 880-4741 or reach out to us through this website.