Types of Investment and Securities Fraud
When people trust an investment company to maintain and grow their savings, they expect to get accurate and professional information tailored to their situation. Unfortunately, sometimes stockbrokers and financial advisors decide to earn some money by taking advantage of their clients. As a result, innocent victims can lose their life savings. If this happens to you, your retirement income will be gone, and the years of collecting money will be wasted. If you are a victim of a broker misconduct, stockbroker fraud, or a similar situation, you should hire a lawyer who specializes in securities fraud in FL.
Bond Fraud and Misconduct
It is a common type of fraud and has a significant number of victims. Bonds are debts sold by government entities and companies to investors with the purpose to raise capital. Brokers and financial advisors often offer them to their clients and ensure them that these are safe investments. If you decide to invest money in bonds, you should be aware that something like this can cost you a substantial portion of your retirement savings. The first category of bonds includes corporate bonds, and they are issued by companies with the purpose to generate funds. The second group comprises of federal bonds, which are sold by the federal government.
Municipal bonds are the third category, and they are issued by cities, states, and other government entities. Their purpose is to fund civic projects. Finally, the fourth general category includes agency bonds. They are issued either by government agencies or by government-sponsored enterprises. All of these four groups contain different forms of bonds, and they can be bought either individually or through bond funds. Unfortunately, financial advisors don’t always explain potential dangers to their clients, and as a result, investors can lose their savings because of risky investments.
Excessive Trading and Churning
If you have no idea what churning is here is an explanation – it is a common form of investment fraud, and it happens when a financial broker trades your securities excessively, no matter what your financial objectives are. They do it because they want to generate commissions. Churning can be quite profitable for unethical brokers and other experts. However, it is usually very costly to the people owning the money that is being invested. It can devastate your retirement savings. Churning is prohibited by FINRA or the Financial Industry Regulatory Authority. You have an option of hiring a lawyer who specializes in investment fraud cases and filing a claim against your broker.
Breach of Broker’s Fiduciary Duty
The duty of a broker is to arrange a contract between buyers and sellers. In return, he or she receives a commission. Broker’s obligation is to coordinate contracts as an objective third party that doesn’t have a personal interest in the property that is a subject of the agreement. This property can include insurance, mortgages, bonds, stocks, real estate and commodities. In case the broker doesn’t adhere to financial and moral legalities, he or she risks committing a fraud. Brokers violate their fiduciary duty if they provide advice that doesn’t meet the needs of their clients.