Broker Misconduct

Litigating Against Unethical and Illegal Behavior in Los Angeles

We have a general understanding that the stock market and related instruments can be quite volatile. There will be ups and downs, and we have all heard the ubiquitous "past results are not indicative of future results."

How, then, are we to know the difference between unfortunate fluctuations in the market or actual misconduct on the part of the broker who handles our company's investments? It is wise to keep a keen eye on your business' portfolio.

If you see evidence of unethical or illegal behavior such as ignoring explicit instructions, investing in over-risky instruments, or over-trading of your account, a business litigation lawyer can offer sound legal guidance and swift action to protect your investments.

There are many avenues that an unscrupulous broker may follow that can constitute misconduct. One of the most common types of these unethical behaviors is called over-trading. Since commissions are tied directly into transactional activity, a broker may engage in "churning" - that is, buying and selling of stocks too often and in a short amount of time - to gain fraudulently high commissions.

If a broker invests your low-risk portfolio in high-risk endeavors and investments, such as variable annuities, or does not make the risk level clear to you, you may also be able to litigate to recover losses. A broker is held to a high standard of trust by his investors and must always gain permission to make trades. When he does not, this is known as unauthorized trading and can lead to severe and unmerited losses.