Stockbrokers can harm clients in a number of ways, especially in they engage in any of the following behavior:
- Excessive trading to generate more commissions for the broker (called "churning")
- Giving a client false or misleading information that induced the client to trade
- Trading without the client’s authorization
- Sending the client a confirmation of sale (known as a "wooden ticket" in this scenario) when the client has authorized the sale beforehand
- Recommending excessively risky investments for the client’s circumstances
- Forgery or theft
- Distributing misleading investment documents
- Making negligent or unsuitable recommendations
What Can I Do If My Broker Mishandled My Account?
If you have a complaint against your broker concerning 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 negotiating with your broker and complaining to his branch manager has not led to a resolution of your problem, then you should contact 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.