Stock fraud occurs in a number of ways by which a trusted investment firm or broker engages in transactions that harm their investors. St Louis stock fraud attorneys the Goldblatt Law Firm can review your individual situation. We will determine if any of the following activities such as churning, misrepresentation, over-concentration or unsuitability has taken place, causing significant financial loss for you.
• Churning- is when a broker has traded the same stock multiple times in a short period for his or her own benefit and not yours. Each time a stock is bought or sold, you pay a commission. These commissions are calculated on a per transaction basis, either flat fee or percentage. By deliberately increasing the number of transactions for no other reason except to generate these commissions, a broker is guilty of committing stock fraud. It is a broker’s job to manage your investments by engaging in some amount of transactions, and these will occur in your account as part of a normal week’s or month’s activity. This makes churning difficult to prove. This is why it is important to have an experienced stock fraud lawyer review your case.
• Misrepresentation - is a deliberate method used by brokers to misguide or influence a client, disregarding the possible negative consequences to that investor. Misrepresentation can take occurs in two ways: exaggerating the potential gains and earnings of a particular stock in order to encourage the purchase without disclosing the risk is one; or omitting information that could result in significant losses when proposing the purchase or sale of stock to a client.
• Over-concentration - is a form of stock fraud where the broker fails to invest in a variety of stocks. This places the client’s money at risk since earnings or losses will depend on the performance of one single stock or type of stock. This leaves the investment vulnerable. By diversifying the investments, there is a greater level of protection in case any one stock takes a drastic downturn.
• Unsuitability - is a type of fraud where a broker pressures a client into purchasing a certain stock that has a known negative track record. By purchasing this stock, the investor is set up for financial loss. It occurs when the broker has full knowledge of the risk, but keeps that information from the client.
If you have experienced a devastating financial loss due to the mishandling of your investment and you suspect stock fraud, consult with the St. Louis Goldblatt Law Firm to discuss the matter in detail.
Call our offices at 314-288-8455 or complete our online form.