Investor Claims Against Stock Brokers
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What Are Some Typical Claims That Clients May Have Against Their Stock Brokers?
Problems that arise in the broker-client relationship regarding investments generally occur in the following areas:
- Excessive trading to generate more commissions for the broker (called "churning")
- Giving you false or misleading information that induced you to trade
- Trading without your authorization
- Sending you a confirmation when you have not agreed to buy the stock. This is referred to as a "wooden ticket"
- Recommending excessively risky investments for your circumstances
- Forgery or theft
- Distributing misleading investment documents
- Negligent or unsuitable recommendations
How Do I Resolve My Problem If I Believe My Broker Acted Wrongfully In Handling My Account?
If you have a complaint against a broker on how your account was handled, there are several preliminary steps you can consider in an effort to resolve your complaint:
- Talk to your broker and explain the problem: Try to determine where the fault occurred and why
- Put your complaint in a letter addressed to the broker and the broker's branch manager: Be sure to keep a copy of your letter and proof of mailing
- Write to the Compliance Department at the firm's main office: If you broker and/or branch manager are unwilling to resolve the problem to your satisfaction, then you may want to consider doing this. Explain your problem clearly and state how you want it resolved. Also, ask the Compliance Officer to respond to you within 30 days. Keep a copy of all correspondence and proof of mailing.
Do I Need An Attorney If I Feel That I Have A Claim Against My Stock Broker?
If negotiating with your broker and complaining to his branch manager has not led to a resolution of your problem, then you should retain an attorney to help with the problem. An attorney experienced with securities law can advise you whether you have a claim and inform you of your best course of action.
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Last Modified: 11-28-2011 04:09 PM PST
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