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Bilked out of Money – Professional Misconduct

Investment fraud is a form of professional misconduct that unsuspecting people need to be aware of these days.

Investment fraud or investment scams generally have the same outcome – someone loses money they can’t afford to lose. They have been bilked into investing their hard earned dollars in a scheme that sounds “great” but the information is often fake and gravely misleading. Too often in situations like this the person who lost their savings doesn’t have much in the way of recourse to recover their losses.

The unfortunate thing here is that the financial planning industry seems to have more than its fair share of brokers and advisors who would think nothing of scamming their customers just to get rich quick. This isn’t to say that the brokerage industry isn’t regulated, because it is, by federal and state laws. Professional misconduct and fraud is definitely illegal and you may be interested in knowing some of the things to watch for when dealing with financial advisors that walk on the wild side.

There are some advisors that get their money from commissions on the purchase or sale of securities. It’s not hard for some of them to over-buy and sell to get more commissions. This shady activity isn’t easy to spot if the advisor is being overly flagrant about it. On the other hand, this activity, called churning, is obvious if an account happens to be small.

Another thing to watch out for is breach of fiduciary responsibility. Because of the nature of the advisors’ job, advising clients on investments, etc., they have a greater level of responsibility to live up to or a legal fiduciary duty. This means they must act with their client’s best interests in mind and not have any conflict of interest. In the past, there have been cases of financial advisors doing things like investing a retired client’s money into highly volatile stocks. This is a recipe for disaster and considered a breach of duty.

Although many people who work in the securities industry don’t often talk about this, it does happen – financial advisors misrepresenting the facts about an opportunity. They may slightly fudge a company’s earnings or potential to get you to buy stock. The other situation that may arise is if you (or another client) have a hefty investment in a particular security, the advisor chooses to “not” tell you about a potential problem the company may have.

If you happen to catch a financial advisor doing some of the things mentioned above, you may have legal recourse. Keep in mind that in cases like this proving professional misconduct is sometimes difficult to do. Along with that observation comes the added caution that figuring out what kind of conduct is illegal and what isn’t may be a challenge. Why is this? This may turn out to be the case because the SEC lets brokers that sell investment vehicles avoid registering as licensed investment advisors. No doubt you can immediately understand how that would confuse things legally.

If you suspect you have been a victim of professional misconduct, it’s best to talk to an experienced lawyer who works in this area. They will be able to give you some kind of idea as to whether or not you will be able to recover any losses.

Tim Anderson works with Atlanta Personal Injury attorney, Stephen M. Ozcomert. The firm specializes in personal injury, malpractice, motorcycle accidents, and wrongful death. To learn more about Atlanta personal injury lawyer, Stephen M. Ozcomert, visit

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