Americans tend to invest in stock markets. Gallup Poll results showed that about 55 percent of respondents own stock, mutual funds, and equities in their 401(k), IRA, or individual stocks. While stockbrokers may be popular investments, Americans have mixed feelings. They view them as skilled professionals, but they fear fraud, theft, corruption, and other criminal activity. According to the average business lawyer it may be true. If you need a trusted lawyer to help secure or lose your investment, you can find experienced lawyers on Haselkorn & Thibaut
A growing trend
Many of us were shocked to witness high-profile investment advisers, stockbrokers, and financiers routinely being taken to prison after bilking people from their life savings. This begs the obvious question: How safe is our money? It is important that you review the different duties that a stockbroker has towards his customers in order understand how much protection each investor has from malfeasance.
You’ve likely heard the term “fiduciary” or “fiduciary responsibilities.” An individual who manages money to benefit another is called “fiduciary,” while the financier is often called “beneficiary”. This type of relationship is where the fiduciary is legally obliged to place the interests and responsibility of the beneficiary over his own. However, investors and stockbrokers do not always have this type of relationship.
A Series 7 registered representative is a regular broker that holds a Series 7 license. Registered investment advisors, on other hand, can be called a “registered representative” since they are responsible to plan your financial future rather than trading securities. Stockbrokers can still be sued or charged for crimes. It is just that these cases can be more complicated because of the fact that the relationship between broker and client is less clear than a broker with fiduciary duty.
What is Fraud, and how can it be prevented?
Broker fraud is a general term that refers to misconduct committed by trusted financial professionals. This includes lying or denying, theft of unauthorized transactions, poor investments and negligence. Churning can be when a registered agent engages in excessive trades solely to generate commissions, not for the benefit for his client the investor.