Stockbroker FAQs

How Do I Know If My Broker Acted Negligently?
Initial Steps to Determine Broker Negligence

The first step is to determine if you have fallen victim to negligence. Suppose fiduciary negligence by a broker or firm caused losses to an investor. The broker or firm should reimburse the investor for those losses.

There are a few steps to take when assessing if you have been a victim of broker negligence:

  1. The first step in determining broker negligence is to assess the broker's conduct. Determine if the conduct was below the appropriate level of care. Considering that the broker acted like a reasonable financial professional, given the circumstance. Negligence does not have to be intentional. But, it can result from not living up to the standard of care of a reasonable financial advisor, despite good intentions.
  2. Suppose you have determined that you have suffered financial losses due to broker negligence. You may be able to hold the brokerage firm liable for those losses. These cases are often handled in the arbitration process before the Financial Industry Regulatory Authority, or FINRA.
  3. Consult with a securities lawyer to determine if you have a broker negligence claim and attain appropriate representation.

What is a Broker CRD Number?

A CRD stands for Central Registration Depository and is a database containing information on brokers and brokerage firms. Every stock broker licensed to sell securities in the United States has a CRD number.

Every broker and brokerage firm must disclose specific information throughout the entire licensing and registration process. A CRD report may not be inclusive. However, it can provide valuable information, including details on the following:

  • Registration
  • Licensing
  • Background
  • History
  • Complaints

Why Is It Beneficial to Have a Broker's CRD Number?

As an investor, It is crucial to conduct the appropriate research before investing savings with an investment professional. Taking the time to do additional research can potentially go a long way in decreasing the likelihood of investment negligence.

It is essential to determine the registration of a broker or brokerage firm and verify the history of complaints or financial difficulties. Looking up their CRD number is a preferred method.

How to Find a Broker's CRD Number with FINRA's BrokerCheck
  • Navigate to FINRA’s BrokerCheck website
  • Enter in the broker or brokerage firm name, followed by the location.
  • The CRD number is listed under the broker's name or brokerage firm.
  • You're done! You can review qualifications, employment history, potential complaints, and more.

What is Stockbroker Fraud?
Stockbroker Fraud Involves a Range of Misconduct

This overarching term encompasses a wide range of misconduct, including brokerage firms and individual brokers. This entails tactics such as unauthorized trading, misrepresentation, pressuring sales tactics, and more.

There Are a Few Common Types of Stockbroker Fraud:
  • Omissions or misrepresentation: Occurs when a brokerage firm or broker misrepresents facts or does not disclose facts to an investor, resulting in the client losing money. This may be considered a breach of fiduciary duty, and victims may be able to recover losses.
  • Churning: This occurs when a broker participates in excessive trading to generate excess commissions rather than investing in the client's best interests.
  • Unsuitability: Occurs when an investment professional recommends an investment or strategy that is not appropriate for the customer based on the investment objectives, risk tolerance, and other relevant factors. This can occur when a client does not have the financial ability to take on the risk associated with an investment or strategy, if that investment does not match those financial needs or if the client is unaware of the risks associated with certain investments.
  • Breach of fiduciary duty: This occurs in several different circumstances but generally revolves around when a financial professional put their interests ahead of their client's interests and otherwise does not do what is best for the client.
  • Unauthorized trading claims: Occurs when a broker makes transactions without explicit permission. Churning is often involved with this, where a broker is involved with an excessive amount of trading and does not obtain authorization for the trades.

My Broker May Have Misrepresented My Investment. What do I Have to do to Prove It?
What to Show to Prove Broker Misrepresentation

A few things are necessary to pursue a claim through a securities lawyer, against a stockbroker actively.

  1. Proof that money has been lost due to omission or misrepresentation by a broker or brokerage firm.
  2. The broker or brokerage firm actively misrepresented the security investment or omitted certain information about that investment.
  3. You trusted and relied upon the counsel and advice of your broker or brokerage firm.

It is crucial to have a carefully prepared case and an expert team of securities lawyers for cases like this, as many brokerage firms have experience in FINRA arbitration and use very experienced counsel.

If you would like to learn more about FINRA, errors, and omissions cases or have other questions, contact SSEK online or call us today. Our team of expert securities lawyers has over decades of experience with investment scams and securities law. As trained securities attorneys, we have represented countless victims of a breach of fiduciary duties, and losses. Helping clients recover millions of dollars in losses.

Schedule a free consultation to learn more about securities law.

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