Will FINRA or the SEC help me if I've been the victim of broker fraud?

Posted On: October 20, 2011 by Ralph Behr, Esq

No.
The securities industry, through its lobbying efforts, has succeeded in creating a wall between broker misconduct and recovery by federal agency action: the SEC and FINRA will not and administratively cannot help you recover from a claim of fraud by your stockbroker. The result is that the federal agencies charged with regulating the securities industry does not and will not recover losses by investors in 99% of the claims. If you complain to the SEC, and the complaint has merit, it will open an investigation. The ultimate result of an SEC investigation may be an enforcement proceeding or fine imposed on the financial advisor or the brokerage house. The SEC will not recover losses for individuals, it will only impose fines, with a few exceptions that for your purposes means the agencies might as well not exist if you claim broker fraud, most claims of broker mis-conduct such as placing your money into investments that are not proper for your investment goals, excessive risk, and most of the abuses we find brokers committing on their clients.

The SEC receives around 50,000 complaints every year. The SEC takes action on lesson 100 complaints every year. FINRA receives about 5000 complaints a year. And like the SEC takes action on only a few hundred. These actions may result in broker discipline or the filing of charges against the brokerage house. It will not resolve with a recovery for the losses of an individual investor. Recovering losses is not designated as a governmental function in the United States. Recovery of losses due to stockbroker fraud is done through the arbitration process or in some special cases permitted lawsuits in federal court.

Security fraud lawyers in South Florida, Boca Raton and Fort Lauderdale, will appear before the securities regulating agencies to press for losses incurred by their clients. If you open a trading account in any stockbroker firm and he subsequently believe you have a claim for broker fraud or misconduct: your only recourse is arbitration. Securities fraud lawyers deal primarily in representing victims of financial advisors.