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Knowing Where to Look – Various Entities and Individuals Can Commit Securities Fraud

May 12, 2015 Blog

When you suspect that your stock market or other investment losses are the result of something other than ordinary market forces, it is important to take action promptly. You will want to try to protect what’s left, and in some circumstances, a delay can make it more difficult to pursue a claim for compensation.

But, how do you know who is to blame for your losses?

In some cases, it may be relatively clear who is to blame – such as if you worked directly with an independent stock broker or advisor. However, in other cases, making such a determination can be quite challenging. You will also want to make sure that you file claims against all responsible parties.

It is not unusual for several parties to be involved in perpetrating securities fraud and your claim will need to appropriately assign liability to each of the individuals and companies involved. An experienced securities fraud lawyer will be able to help you get to the bottom of your case and ensure that you hold all responsible parties accountable for their actions.

Who Can Commit Securities Fraud?

As an investor, you may rely on any of a number of different people and business entities to manage your funds, provide advice and make trades on your behalf. Unfortunately, each additional player represents an additional point of risk where decisions can be made without your best interests in mind. Securities fraud arbitration and litigation frequently involve claims against:

  • Stock brokers – These are individuals who, acting as agents, make trades on behalf of their clients. Brokers receive fees and commissions on individual trades.
  • Brokerage firms – Brokerage firms are financial institutions that facilitate securities transactions among their clients and other buyers and sellers in the marketplace.
  • Investment advisors – An investment advisor is someone who provides recommendations for investing in stocks and other financial instruments. Investment advisors typically work directly with brokers in order to execute trades.
  • Investment banks – Investment banks are major market players that purchase large volumes of holdings for resale to individual investors.
  • Companies that manage employee stock programs – Many publicly-traded companies offer savings plans that give employees the opportunity to invest in the company’s stock. These companies hire plan managers who are obligated to make prudent investments on behalf of participating employees.

Brokers, brokerage firms and advisors who deal in publicly-traded securities are required to register with the Securities and Exchange Commission (SEC). While the registration process serves an important role, there is no guarantee that registered brokers and advisors will adhere to their fiduciary obligations.

As a result, it is important to always perform your due diligence before trusting someone with your investments, and you should monitor your portfolio for questionable activity on an ongoing basis. This will give you the best chance to react quickly if something goes wrong.

Questions? Contact Zamansky LLC

Zamansky LLC represents clients nationwide in securities fraud arbitration and class action lawsuits. To schedule a free consultation with one of our attorneys, please contact us today.