Dealing with broker malpractice

Investing can be a risky business, so much so that those who do it in Jacksonville are said to be "playing the market." Like many of those that we here at St. Denis & Davey have worked with in the past, you may simply be a casual investor who relies on the expertise of others to help you in developing your portfolio. Also like those same clients, you may discover that your lack of knowledge of the complexities of the investment industry leaves you open to being take advantage of by brokers. 

Some common schemes brokers may attempt to try to exploit you include: 

  • Self-dealing: Conducted transactions meant to primarily benefit the broker
  • Churning: Excessive trading in order generate commissions
  • Ponzi schemes: Using your money to pay returns to other investors rather than conducting legitimate business activities 

When you are a "hands off" investor, it can be easy to be defrauded in any of these ways. Having an accountant, attorney or other financial professional review your investment reports may help to spot those times when your broker is operating in bad faith. 

What should you do if you discover your broker is acting fraudulently? The website BankRate.com recommends that you file for securities arbitration. The first step in this process is filing a claim with the Financial Industry Regulatory Authority (we can help you with this as it can be quite a complex process). Any claims for over $25,000 will require a formal hearing. Gather all of the evidence supporting your assertions (emails and texts between you and the broker, brokerage statements) to present to the arbitration panel. Hearings may take up to a week, after which the arbitrators must render a decision within 30 days. 

You can learn more about dealing with professional malpractice by continuing to explore our site. 

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