Investor Recovery Center - Stockbroker fraud & misconduct

Investor Recovery Center is Closed

As of September 1, 2008, Vincent DiCarlo, who maintained this site, is no longer engaged in the private practice of law. His former law office website is at.

This site is no longer maintained, may no longer be accurate,and is provided for historical purposes. See disclaimer below.

Stockbroker Fraud, Lies, and Misrepresentationsfraud

Stockbroker fraud usually involves stockbroker misrepresentations, which is legalese for "stockbroker fraud". Often, stockbroker fraud occurs in the context of boiler room operations, from which teams of bad stockbrokers with a history of fraud, including lies and misrepresentations, make a high volume of cold calls using high pressure tactics and fraudulent statements. Sometimes, whole account statements are forged to cover up the stockbroker's fraud, theft, or misconduct.

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.

If you have lost money on an investment in reliance on stockbroker fraud, lies, or misrepresentions, you may have a claim for stockbroker fraud that may be worth pursuing .

DISCLAIMER: Vincent DiCarlo, who authored and maintained this site, has entered government service and, as of September 1, 2008, is no longer engaged in the private practice of law. Therefore, this site is no longer being maintained, may not be accurate, and should not be relied upon. It is not now and was not ever intended as legal advice. It is being provided for historical purposes, and for the benefit of those lawyers who are capable of independently verifying the information and judging the opinions in it, and then reaching their own conclusions. You are strongly advised to consult qualified 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, and may no longer be accurate or prudent in any case. The opinions and statements at this site were solely those of the author. They were not and are not those of, nor were they nor are they made on behalf of, any agency of government or anyone else.

Copyright Â© 1998-2008 Vincent DiCarlo