Financial Fraud

Stock Broker Fraud, Deceptive Investing Tactics Among Types of Corporate Fraud

As the financial crisis has crippled the United States economy, many desperate investors have fallen prey to unscrupulous investment brokers, dishonest corporations, and other shady financial industry professionals. The sale of unsuitable investments, the failure to disclose the risks of certain investments, and other illegal, unethical activities have cost investors and consumers billions of dollars in savings, college funds, retirement accounts, and other funds. Some of the nation’s largest investment houses, including Bear Stearns and Lehman Brothers, have been involved in corporate and investment fraud scandals.

The securities industry is closely regulated by the government and by industry licensing bodies, which impose professional and ethical rules for brokers. When securities brokers break the law or violate industry standards in their dealings with clients, they can face criminal prosecution, fines, and the loss of their broker’s license, among other penalties. Meanwhile, investors who lose money as the result of illegal or unethical conduct by their brokers may be able to recover their financial losses.

TYPES OF CORPORATE FRAUD

Stock broker fraud and the mismanagement of investment accounts can occur in the following ways:

• Sale or offering of auction rate securities
• Offering of investments that are unsuitable for the client
• Sale or offering of variable annuities
• Churning of the investment account with unnecessary activity to earn commissions
• Unauthorized trades
• Abuse of margin accounts

CONSUMER FRAUD

Many consumers are victims of shady company billing practices, deceptive marketing techniques, and other illegal tactics. Internet coupon offers may be used to trick consumers into enrolling in membership programs and allow unauthorized charges to be made to the consumer’s credit card. In many cases, defrauded consumers who were victims of fraudulent or dishonest business practices can recover their losses.