Under the law, even a prediction or statement of opinion by a stockbroker can consitutute stockbroker fraud when it has no reasonable basis. Statements by a dishonest stockbroker that a particular stock "will break 50 by June" or the like almost never have a reasonable basis, can be stockbroker fraud, and can be grounds for a claim if the investor reasonably relies upon the broker's fraudulent statements in making a losing investment.

Some of the most commonly heard lies and misrepresentations from actual stockbroker fraud cases are:

• "This stock is a sure thing." This is never true, and always constitutes stockbroker fraud and misrepresentation.
• "This stock will hit 50 by June." There is no legitimate way any broker can say this. It is almost always stockbroker fraud.
• "You can get your money out any time you want." This is not true for many illiquid investments, such as most limited partnerships, or for investments with a back end commission or penalty for early withdrawal. In those cases, it is stockbroker fraud.
• "We will monitor your account and sell you out before you lose money." This is often not done, and often cannot be done due to a thin market in some highly promoted stocks. If knowingly false this statement constitutes stockbroker fraud and misrepresentation.
• "You are getting in on a hot public offering." Sometimes this is true, but sometimes the brokerage firm is selling you its own stock out of inventory that it bought at a much lower price than what you pay. Then it is stockbroker fraud and misrepresentation.
• "The company is about to announce a merger." If the broker has no basis for saying this, it is stockbroker fraud and misrepresentation.
• "The company is about to announce a major deal with a large company." If no basis, stockbroker misrepresentation and fraud.
• "We control the price of the stock and are taking it up." If this is false, it is a misrepresentation and therefore stockbroker fraud. If it is true, it is a stock manipulation. Either way, the broker or his firm are guilty of stockbroker fraud and misconduct.
  

DISCLAIMER: The information at this site is provided as a public service concerning stockbroker fraud. It is not intended as legal advice and should not be relied upon. You are advised to consult legal counsel before adopting any of the ideas or suggestions in this material, which may or may not be applicable in your jurisdiction or to your specific situation.
This page last updated on April 10, 2006
Copyright © 1999-2008 Vincent DiCarlo