Stockbroker Misconduct

Stockbrokers and investment professionals owe their clients the highest fiduciary duties, including the duty to act in the customer's best interest and not to engage in self-dealing or conduct that is designed to benefit the stockbroker at the expense of the client. The stockbroker has a duty to place the client's interests above the interests of the stockbroker or the stockbroker's employer.

The federal securities laws declare it unlawful to make any material misstatement or omission of fact in connection with the purchase or sale of securities. Misstatements include mischaracterizations or false statements made with respect to a particular security, the issuer, or the exaggeration of facts concerning a company, its business prospects or special information in possession of a broker or the securities brokerage firm.

Omissions include the failure to disclose a fact or set of facts, which would render other statements materially misleading. A statement is material if it assumes actual significance in the deliberations of a reasonable investor. If a securities broker touts a particular security and makes a misstatement concerning an important contact with a company and a potential business prospect, or an upcoming earnings, or other announcement, which the broker either knows to be false or makes with a reckless disregard for the truth, these are misstatements.

Omissions, include, for example the announcement of an important contract, which in fact may be true, but fails to disclose that the company lacks the working capital or resources, which are required to perform on any such contract. A half truth is still a whole lie.

There are other forms of stockbroker misconduct, which are actionable under the law. These claims against stockbrokers for investment fraud or stockbroker fraud include Suitability, Excessive Activity or "Churning," Margin Account Fraud, Unauthorized Trading, Breach of Fiduciary Duty, Financial Suicide, Mutual Fund Fraud, Failure To Execute, Failure To Supervise, or the sale of unregistered securities, and variable annuity fraud, where the offending brokerage firm may be responsible for damages.