Instances in Which Investors Can Sue Their Brokers for Stock Losses
It’s no secret that the stock market is one of the most efficient and proven ways to make a lot of money. Being an individual investor though, there is no denying that there also are certain risks involved in trading. One of those notable risks is when you become a victim of fraud, error, or misconduct by your own stock brokers.
In times when the actions of a stock broker lead to you, the investor, losing money, there’s an unwritten rule that says you should be entitled to receiving financial compensation. However, the fact that you’re an individual investment means that it’ll be very difficult to prove that the stock broker’s actions indeed led to your stock market losses. But there’s a solution for this. What you can do is hire a stock market lawyer, who in turn will be conducting a comprehensive investigation in order to determine if your losses are indeed connected or directly linked to a misconduct by your stock broker.
But you do have to understand that it is not always immediate that you can easily sue your broker. But hiring an experienced security lawyer doesn’t necessarily mean you’re suing right away. First things first, you must know that not all stock brokers are subject to the idea of fiduciary duty. What this actually means is that there are brokers, with respect to the relationship with investors, who aren’t legally obligated to put the client’s interests before their own. With this in mind, it’s obviously better for you to talk about this before choosing any broker, and also, try to avoid working with an unregistered stock broker as much as possible.
There’s a good chance you’re in for a court or legal battle in case your broker fails to execute trades. Because stock brokers literally can’t make money based on commission if they don’t place opening orders, it means that they likely won’t fail in this job. But then again, negligence and silly mistakes can lead to orders getting lost and they end up failing to trade. But what you should be wary of are those brokers who will deliberately refuse to place a closing order with the hope that they might be able to make more money later on if they wait it out. Hence, in case you requested a trade but the broker didn’t execute it, you have the prerogative to go to a stock market lawyer’s office and get some advice on how you can recover your losses.
One other case in which you might be able to sue your stock broker is if he makes an unauthorized trade, something that’s actually quite the opposite of the first scenario. In other words, if the broker makes trades using your account without your consent, then it is enough ground to ask for compensation for your losses in the stock market.