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22 Mar 2021

There are many tricks of the trade used by bad actors and criminal business ventures to maximise their profits at the expense of their clients. One example that many people fall victim to is stock fraud; if you think you have been a victim of any stock fraud, you should contact our fraud solicitor at ABV Solicitors.

The trust between a client and a stockbroker is not just a polite formal arrangement or a matter of ethics. The power management of another person’s assets is a privileged position, which has a lot of legal ramifications

There are several tricks that you should be aware of if you suspect your broker of misdeeds.

Churning

This is buying and selling unnecessarily. It happens when a broker is paid for each trade and they, therefore, get to charge more by buying and selling the same assets over and over.

Unsuitable investing

Simply acting outside the guidelines set by the client or making higher-risk investments that have not been discussed can be seen as unsuitable. It can also be investing in types of industry that the client wishes to avoid, like fossil fuels, tobacco or alcohol.

Unauthorised trading

This is usually the liquidation of assets without the client’s knowledge or consent, often intending to make a quick profit and then re-buying the assets without them noticing.

Fiduciary breaches

In some situations, financial advice can be considered a fiduciary breach. If a third party is advising the investment advisor about investing in stock without the client’s knowledge. And so, this enables the broker to overspend their mandate, with the client’s best interests, pushed to the back.

Failure to execute duties

Many investments come with legal responsibilities. When the assets are acquired, those responsibilities fall on the broker. If they fail to meet those requirements, it can end in fines and penalties for the client.

Omissions and misrepresentation

Lying and failing to disclose is a breach of the client-brokerage relationship, which can result in a claim.

Failure to diversify

Putting all your eggs in one basket has much greater risks unless specifically instructed to do so. The legal expectation is that a broker must diversify their clients’ assets using multiple financial instruments to minimise risk. If your broker has failed to do so, our fraud solicitor at ABV Solicitors can help you.

There is a statute of limitations on arbitration of stock and fraud claims. If you or someone close to you may have suffered from a questionable broker, please get in contact as soon as possible so we can assess the situation. Our fraud solicitor at ABV Solicitors will aim to at least advise you on how to proceed if you are uncertain if you have a claim. The list above is not exhaustive and the nature of fraud is subtle deception. The underlying factor is do you feel your broker has put your best interests first? If they have used your assets for their own benefit, they have broken regulations and you are entitled to be compensated for the harm they have done.