Some common types of investment abuse and broker misconduct include:
- Fraud – Misrepresenting or omitting important information, such as the risk to the investor.
- Unauthorized Trading – Making trades without the investor’s knowledge and consent.
- Churning (Excessive Trading) – Making multiple trades that generate commissions at the expense of the investor’s best interests.
- Annuity Switching – Switching out of one variable annuity and into another to generate commissions at the expense of the investor’s best interests.
- Unsuitability – Recommending investments that do not meet the investor’s needs, including investments that are too risky. Examples of types of investments that may not suitable for every investor include: variable annuities, hedge funds, collateralized mortgage obligations (CMOs), equity-indexed annuities, speculative stocks and partnerships.
- Margin Trading – Increasing risk of loss through a line of credit secured by the investor’s investments.
- Over Concentration – Over recommending one type of investment. Examples include putting too much of the portfolio in a single type of investment, a single stock or in a single industry. Over concentration can lead to tremendous losses if the stock or industry suffers declines.
If you think you may have been the victim of investment abuse or incompetence, including misconduct not listed above, contact Vernon Healy.
