Stockbroker Misconduct

Stockbroker Misconduct

Important Information From a Columbus Stock Broker Misconduct Attorney

Investors must trust stockbrokers, annuity salespeople, financial officers, retirement account managers, and investment advisors to take care of their money with the utmost honesty and integrity. Misrepresenting the benefits and risks of an investment or diverting funds from their intended purpose do more than cost investors cash in the short run. Defrauding investors or stealing investors’ cash robs people of their long-term financial security. A person who has put his or her faith in an untrustworthy or felonious investment professional can face their last years penniless and struggling to keep a roof over their heads.

The federal Securities Exchange Commission (SEC), the Ohio state government’s Division of Securities (DOS), and independent organizations like the Financial Industry Regulatory Authority work every day to prevent and punish violations of investors’ trust that are known generally as stockbroker misconduct. Criminal fines, the all-too-rare jail sentence, and revocation of professional privileges represent just one form of justice for brokers, agents, and advisors who deal in bad faith. Investors who have been swindled and stolen from usually need to file claims with regulators and civil lawsuits in order to get their money back. In some instances, cheated investors can also receive monetary damages from their filings and court cases.

Working with a Columbus investment fraud attorney while seeking reimbursement and restitution from an investor dispute involving stockbroker misconduct can increase the chances for reaching the most satisfactory outcome.


Do Your Homework

Financial regulators have a hard time monitoring all the companies and individuals involved in selling and managing investment products. Annuities, IRAs, 401(k)s, individual stocks, real estate funds, pension plans, and other types of investments number in the millions, as do the people who identify themselves as investment salespeople, advisers, and managers. Because the investment field is so large and complex, people looking to earn returns on their money need to serve as the first and best defenders of their own fiscal interests.

Fairly new requirements for the licensing and certification of investment professionals, as well as the growth of the internet, have made investigating the quality and performance of investments and the people promoting them easier than in the past. Three places any potential investor should look before signing an investment contract include:


  • ERNIE—a publicly available database of securities registered with the Ohio DOS, that contains information about the investment product and who bears responsibility for its management.
  • BrokerCheck—a publicly available database maintained by FINRA, which lets investors learn about brokers’ and agents’ employment histories, certifications, licenses, complaints, violations, and regulatory actions.
  • Investment Adviser Search—a publicly available database maintained by the SEC that allows investors assess the trustworthiness of financial professionals.


Consulting these online databases is only the first place to start. Investors should strive to learn as much about investments and the individuals offering them as possible.


Be Alert for These Types of Stockbroker Misconduct

Even the most cautious and diligent investor can be betrayed by a dishonest and unethical investment salesperson or adviser. Some of the most common types of stockbroker misconduct that may become apparent only after an investor has lost a great deal of money and peace of mind include:

  • Making false or misleading statements, such as guaranteeing returns that never materialize, lying about the nature of an investment (e.g., claiming a fund is “green” when it includes oil company stocks), or stating that the only way to prevent a financial loss on one investment is to purchase another investment product.
  • Improperly downplaying risks and failing to disclose essential information, including company and agent identities and contact information.
  • Making unsuitable recommendations, which includes both promoting investments that will harm investors and insisting that investors exceed their preferred degrees of risk.
  • Failing to recommend proper diversification of investor’s portfolios, resulting in an overconcentration in too few stocks, industry segments or risk categories.
  • Focusing on charging commissions rather than maximizing investors’ returns.
  • Charging excessive fees and applying hidden fees.
  • Churning, which amounts to making unnecessary trades just to collect transaction fees, to obscure profits and losses, or both.
  • Conversion, or using an investor’s money as if it were the stockbroker’s own.


Conversion represents a particularly serious crime regardless of the amount stolen and/or misused. When investments are involved, some forms that conversion can take include pocketing dividends and taking money meant to go toward a purchase as a fee.


Contact a Columbus, Ohio, Investor Attorney Regarding Stockbroker Misconduct

Every investment carries risk, but no one should ever lose money because the company or person selling an investment was less than completely honest and scrupulous in representing the investor’s financial interests. When dishonesty or theft by a financial professional becomes apparent, contact a stockbroker misconduct attorney in the Columbus office of Leist Warner to schedule a free consultation. Our number is (614) 222-1000, and we can also be reached through this webpage.

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