Trusting a stock broker with your hard earned money is difficult for many first timers. But usually, though doubtful, they invest because of the stock broker’s persuasiveness and charisma. A stock broker is not a financial expert so it really on your best interest to go meet with a financial advisor before you go look for a stock broker.
But before you meet with a potential stock broker; you must first know the common misconducts that brokers commit.
Every person has unique cases where their investment should vary. An investor’s age, financial and life status should be taken in consideration. The other thing that should be considered greatly is his financial goals.
A young and single man has different financial goals to a middle aged man with kids and a mortgage to pay. Even a 65 years old man on pension has different goals to a 65 years old man running his own business. One of the many duties of a stock broker is to make sure that he recommends the right kind of investment depending on the investor’s needs and goals. The willingness of the investor to endure risk will depend on his financial goals and his current life and financial state.
Omitting or misrepresenting facts
Many brokers lie or omit important facts that you can use to buy and or to sell your investment. These facts are needed for you to make intelligent decisions that can make or break your investments. A broker’s omission or misrepresentation of facts is neglect or carelessness can cause you your loss that your broker can be liable of.
“Churning” or Excessive Trading’
Churning is an act where the broker engages is excessive trading to generate more commissions for his own benefit. This usually happens to brokers who earns by commission where they benefit when the investor wins or even when he lost. Churning is fraud so a broker can be sued for the act.
Engaging in unauthorized trading
It is a breach of the broker’s fiduciary duty and a violation to your rights when a broker engaged in unauthorized trading. Though a broker is permitted to buy and sell your security only after receiving your permission, sometimes traders to so without your permission or approval. If the act resulted to a loss, your broker is liable for that loss and should pay you for your loss and damages.
Failing to follow instructions
Your broker must wait for your instructions before buying or selling any of your security. In the event that he did not follow your instruction where the any upward or downward movement of the economy can cost you money then you have the right to recover you loss from the broker. Any instructions not followed or when you are pressured by your broker to change your instructions where it cost you money is still reason enough for you to be refunded specially if these instruction are not met for his own well-being.
Your stock broker may hatch a plan to steal your money that could lead to criminal activities like fraud, theft and forgery. Schemes like so may be done where the brokers buys and sells securities on the side without the company knowing of such activities. You as the investor have the rights to seek recovery for any criminal acts that could result to you losing money on the process.