Types of Investment Fraud

Investment fraud takes many forms, from unauthorized trades in your account to elaborate Ponzi schemes. If your broker, financial advisor, or brokerage firm engaged in misconduct that caused you financial losses, you may have a claim. Attorney Gary Varnavides spent 10 years defending broker-dealers at Sichenzia Ross Ference LLP — he knows how firms operate from the inside and uses that knowledge to fight for investors. Contact us for a free case evaluation.

Trading and Market Manipulation

Brokers and traders who manipulate markets or execute deceptive trading strategies violate federal securities laws and FINRA rules. These schemes artificially inflate prices, create false demand, or exploit access to non-public information, causing significant losses for unsuspecting investors.

Boiler Room Fraud

High-pressure sales operations that push worthless or overvalued securities using deceptive tactics and cold calling.

Cherry Picking Fraud

Brokers who allocate profitable trades to favored accounts while dumping losing trades on other clients.

Insider Trading

Trading securities based on material, non-public information in violation of a duty of trust or confidence.

Pump and Dump

Schemes that artificially inflate stock prices through false promotion, then sell at the peak while investors suffer losses.

Stock Manipulation

Illegal practices that distort market prices or trading volume to deceive other investors and profit at their expense.

Unauthorized Trading

Executing trades in your account without your prior knowledge or consent, violating FINRA suitability and authorization rules.

Account Mismanagement

Account mismanagement occurs when brokers and advisors prioritize their own commissions over your financial interests. These violations involve excessive activity, unsuitable recommendations, and improper concentration of assets — all of which breach the fiduciary and suitability obligations owed to investors.

Churning And Excessive Trading

Brokers who trade excessively in your account to generate commissions, regardless of whether the trades benefit you.

Excessive Commissions

Charging unreasonable markups, markdowns, or commission rates that erode your investment returns.

Margin Accounts

Improper use of margin that amplifies risk beyond your tolerance, often without adequate disclosure of the dangers.

Mutual Fund Fraud

Improper mutual fund switching, breakpoint violations, and unsuitable share class recommendations that generate hidden fees.

Overconcentration

Placing too much of your portfolio in a single security, sector, or asset class, exposing you to unnecessary risk.

Unsuitable Investment

Recommending investments that do not match your risk tolerance, financial goals, time horizon, or investment experience.

Fiduciary Violations

Financial professionals owe legal duties of care, loyalty, and good faith to their clients. When brokers or advisors breach these obligations — by putting their interests ahead of yours, conducting unauthorized business, or failing to supervise — they can be held accountable through FINRA arbitration.

Breach of Fiduciary Duty

Advisors who violate their duty of loyalty by acting in their own interest rather than yours.

Broker Misconduct

A broad category covering unethical broker behavior including lies, omissions, conflicts of interest, and rule violations.

Failure to Supervise

Brokerage firms that fail to properly monitor and supervise their brokers, allowing misconduct to continue unchecked.

Selling Away

Brokers who sell securities outside their firm’s approved product list, often in unapproved private deals.

Misrepresentation and Negligence

Investors rely on the information provided by their brokers and advisors to make decisions. When financial professionals misrepresent risks, omit material facts, or fail to exercise reasonable care, they cause real harm. These claims are among the most common in FINRA arbitration.

Breach of Contract

Violating the terms of your customer agreement, advisory contract, or other written obligations owed to you.

Failure to Execute Trades

Brokers who fail to carry out your trade instructions in a timely manner, causing missed opportunities or losses.

Investment Misrepresentation

Making false statements or omitting material facts about an investment’s risks, returns, or characteristics.

Investment Negligence

Failing to exercise the standard of care expected of a reasonable financial professional, resulting in avoidable losses.

Fraudulent Schemes

Large-scale investment fraud schemes can devastate entire groups of investors. Ponzi schemes, hedge fund fraud, and other organized fraud operations often go undetected for years before collapsing, leaving investors with catastrophic losses and limited time to pursue recovery.

Hedge Fund Fraud

Hedge fund managers who misrepresent performance, take excessive risks, or misappropriate investor assets.

Ponzi Scheme

Fraudulent operations that pay existing investors with funds from new investors, creating an illusion of legitimate returns until the scheme collapses.

Asset Misappropriation

The most egregious form of broker misconduct involves the direct theft or misuse of client funds. When a broker steals from your account or takes unauthorized personal loans from clients, criminal liability and civil recovery options both apply.

Investment Theft

Brokers who steal client funds, forge signatures, or convert client assets for personal use.

Stockbroker Loan

Brokers who borrow money from clients in violation of FINRA rules prohibiting such arrangements.

Commodities Fraud

Commodities fraud involves deceptive practices in the trading of futures, forex, precious metals, and other commodity-based investments. These products are regulated by the CFTC and NFA, and brokers who misrepresent risks or execute unauthorized commodity trades can be held liable for investor losses.

Securities and Commodities Fraud

Fraud involving commodity futures, forex, precious metals, and other commodity-based investments regulated by the CFTC and NFA.

Suspect Investment Fraud?

If you lost money due to broker misconduct, you may be able to recover your losses through FINRA arbitration. Attorney Gary Varnavides offers free case evaluations and handles most investment fraud cases on a contingency fee basis.

Free Case Evaluation