Las Vegas Securities Lawyers Advocate Against Questionable Risks

Educating investors in Nevada on the signs of broker fraud

Normal investment loss is pretty clear. The client investor had money, they invested in funds only after following advice from their broker, and now are without that money. Other signs are more subtle situations where the losses could plausibly be attributed to poor market performance. It takes a seasoned eye to scour financial records and the market to determine if the loss was a natural result of the circumstances or if the investment itself was unsuitable for the client and the broker was aware. Our Las Vegas securities lawyers are here to help inform investors about the obvious and understated warnings signs of broker fraud.

The Frankowski Firm believes that by educating the financial population, including both small-scale investors and larger scale investors, we can achieve a more transparent and equitable industry for everyone involved. We strive to assuage our clients’ concerns with various investment professionals and restore any lost finances through legal recourse. We help investors who, because of the negligence or incompetence of their broker or brokerage, have sustained financial losses.

What are common types of broker fraud?

The following are the most common types of broker fraud that our Nevada broker fraud lawyers regularly work to protect clients from:

  • Ponzi schemes. In this investment scheme, the only revenue stream is the recruitment of new investors’ money. When the pool of potential investors runs out or becomes saturated, the alleged profits come to an end.
  • Failure to supervise. Brokers and financial advisors are subject to state, federal and local regulations, and it is the responsibility of investment firms to monitor their employees to ensure compliance.
  • Failure to Diversify. Overconcentration occurs when an investment portfolio constitutes far too narrow a scope of investments. The danger lies in the old adage “Don’t put all your eggs in one basket,” as the loss of that ‘basket,’ or one investment class or type, could have devastating effects to the portfolio as a whole.
  • Breach of fiduciary duty. Investors take solace in the fact that financial advisors have a duty to provide them with sound advice and guidance, unbiased by any potential gain the advisor may obtain from selling certain securities. To violate that trust is a breach of the advisor’s fiduciary duty to the client.
  • Account churning. Account churning consists of brokers making frequent sales and purchases for the purposes of collecting commissions, rather than for any benefit to the investor client.
  • Selling away. Brokers may attempt to sell investors securities that are not held with their firm in order to obtain a commission. However, this is a fraudulent practice, and firms must closely monitor their brokers to avoid letting this practice occur.
  • Suitability claims. “Best interests” is a vague term, but the SEC and FINRA have been quite clear on what this constitutes for investors. Respect for age, investment goals, risk preference, tax status, financial solvency, investment time frame and liquidity needs are all mandated as the boundaries of acceptable conduct for investors. When even one of these classifications is violated, the broker or investment firm has violated its duty to recommend and sell suitable investments to their clients.

As many investors have found, not every broker or investment firm has the client’s best interests at heart, preferring to make themselves money than to care for the client’s investment. Legally, every investment broker is obligated to adhere to the doctrine of suitability, recommending investments that fit the client’s budget, time frame, and other needs.

Las Vegas stockbroker fraud attorneys advocate for investors

Working with an investment professional can be very helpful, provided of course that he or she follows the doctrine of suitability, keeping in mind the investor’s needs. If you or a loved one has realized that their portfolio exhibits the danger signs of Las Vegas broker fraud, call The Frankowski Firm at 888.741.7503 or fill out our contact form to discuss your legal options.