4 signs you may have a legal case against your broker

| Aug 13, 2020 | Fiduciary Duty, Financial Fraud

You chose your broker because you wanted an experienced guide to building your investment portfolio. However, some brokers may not uphold their professional duty when managing your account. What signs indicate that your stockbroker has mismanaged your account?

Has your broker been trading your stocks frequently?

Trading too frequently—sometimes called “churning”—can signal that your broker is putting their commission ahead of your financial health. Strategies of frequent trading allow your broker to collect commissions on every trade but can create significant losses in your investment portfolio.

Has your broker made trades that you did not authorize?

While some accounts may allow your broker to make sales or trades under specific circumstances without consulting with you beforehand, the Financial Industry Regulatory Authority (FINRA) prevents brokers from making unauthorized trades in most cases. Unauthorized trades could be a sign that your broker is abusing the trust that you have placed in them.

Are trade confirmations marked “unsolicited” when your broker suggested the trade?

When you make an investment, your broker must indicate whether that trade was based on their suggestion or whether you suggested the investment yourself. If your broker is marking trades incorrectly, it may be a sign that your account has been mismanaged.

Have you seen major losses in your account when the market is up?

While every investment account is unique, significant losses when the S&P 500 and the Dow Jones are up could be a sign that your broker mismanaged your investments. It can also be an early sign that you should look at your portfolio to find other potential red flags.

If you see these red flags, it can be important to speak to an attorney about the mismanagement of your investments. They can help you determine whether a lawsuit is right for you and create a strategy that protects your finances after broker misconduct.