Mutual Fund Fraud


Securities Fraud Law Firm

Investors often place their savings into mutual funds to help reach their retirement and other financial goals. Mutual funds are managed by asset management or investment management companies. These companies collect money from thousands of small investors and invest pools of money in a variety of stocks, bonds and other securities. Mutual funds can offer certain advantages, such as professional management and diversification. However, as with any other investment, mutual funds are subject to the risks of market volatility and financial losses.

Excessive Mutual Fund Trading

Mutual fund investors need to be aware of potential broker misconduct and mutual fund fraud. Mutual funds are generally meant to be held for an extended period of time. If a broker is engaging in frequent trading of your funds, this activity should raise a “red flag.”  For example, when a broker recommends that you switch from an existing mutual fund with one company to a new fund with a different company, you will be required to pay “switch fees.” Your investment fraud lawyer warns that when a broker advises you to switch your funds to new companies within a short period of time, generating fees for him- or herself rather than benefitting your investment portfolio, the broker may be liable for mutual fund fraud.

Break Points

Mutual funds generally offer volume discounts on commissions to customers making large purchases. “Break point” refers to the level at which the commission percentage drops and the discount becomes effective.  The more money a customer invests in a fund, the larger the discount.  When a break point exists, brokerage firms are required to disclose this information to the investor. If a broker recommends a purchase that is “just below” the break point, the recommendation is unethical and is considered a violation of FINRA rules. Brokers engaging in this behavior are subject to mutual fund fraud claims and can be held liable for the financial losses of their customers.

The FINRA arbitration attorneys at Zamansky LLC are committed to representing investors who have been subject to broker misconduct and mutual fund fraud. Each stock broker fraud lawyer at our firm has the legal experience and knowledge of the financial industry to help you successfully pursue your case and recover your financial losses. Our securities fraud firm is dedicated to providing you with prompt and personalized attention throughout all stages of the process.

To learn more about your legal rights and options, contact a securities arbitration lawyer at Zamansky LLC. We offer a free, no-obligation initial consultation and respond to all inquiries within 24 hours. Call our offices today at (212)-742-1414 or complete our online contact form.