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What Is Broker Fraud?


Stockbrokers have a lot of power in their hands. Being able to leverage the free market to make nearly any conceivable amount of money is a lot of responsibility – but likewise, a huge liability, especially when it’s someone else’s money. When things go wrong with a broker mismanaging your money, the first thing you should do is call a lawyer. Reach out to a Florida financial fraud attorney from Sharmin & Sharmin today to learn more. 

Defining Stockbroker Fraud

Brokers are individuals who handle other people’s investments in the stock market. As the values of publicly-traded companies and organizations fluctuate, so does one’s potential to earn money. Effectively, people hire stockbrokers as a way to make money through the knowledge and expertise of someone heavily-trained in reading the patterns and news of stocks on the market. 

Brokers handle anywhere from thousands to millions of dollars of many different people, constantly adjusting their portfolios in order to maximize earnings. Yet with such a great amount of power comes great responsibility. As a representation of the rules and regulations placed on them, brokers are required, by law, to disclose all risks associated with a given investment. A broker mismanaging someone else’s money and failing to disclose associated risks (ultimately losing them money) may be the target of a lawsuit. 

Types of Broker Fraud 

Failing to disclose risks associated with investments is just one of many different types of broker fraud. In short, there are a number of different ways that a stockbroker could either mismanage someone’s money or simply steal it. A broker violating any of the laws that regulate their position can mean a potential cash payout for their clients and/or time in jail. 

  • Supplying false or misleading information 
  • Omitting or misrepresenting information
  • “Breach of Promise” or “Breach of Contract,” i.e. explicitly stepping over the boundaries laid out in a contract with the client
  • Trading money without express consent from the client
  • The making of unsuitable purchases
  • Lack of portfolio diversification or over-concentration
  • License and registration mishandling
  • Breaking of fiduciary responsibility standards 
  • Lack of portfolio supervision
  • Financial fraud in the form of negligent portfolio management

Knowing the different types of broker fraud gives clients entrusting brokers with their money a better platform from which they can spot criminal acts. Unfortunately, a single broker misleading their client for their personal portfolio’s gain or simply setting aside an abnormally high commission rate can mean a difference of thousands of dollars. 

Strong and Dedicated Lawyers – Eager to Protect Our Clients

Sharmin & Sharmin is no stranger to the risks and dangers of malicious stockbrokers. We believe that those who give their money to entrusted brokers under United States laws and regulations are entitled to fairness and honesty. 

Reach out to a Florida financial fraud attorney today to learn more about how Sharmin & Sharmin can create a plan to recover your financial well-being. We are available via online contact form or telephone at 1-844-Sharmin. We offer free consultations to all future clients. 

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