Brokerage Fraud
Brokerage fraud is any deceptive or negligent conduct by a brokerage firm or its registered representative that costs a customer money. Tracy Pride Stoneman represents investors in these claims in FINRA arbitration nationwide, from Westcliffe, Colorado.
By Tracy Pride Stoneman, securities arbitration attorney Updated
| What happened | Rule or law | How it is proved |
|---|---|---|
| Misrepresenting an investment or its risk | FINRA Rule 2020; Securities Exchange Act §10(b) and SEC Rule 10b-5 | Emails, texts and recorded calls compared against the prospectus; confirmations showing what was actually bought |
| Trading without the customer’s authority | FINRA Rule 3260 (discretion requires written authorization accepted by the firm); Rule 2010 | Order tickets and time stamps against phone records; the absence of a signed discretionary agreement |
| Recommending products that did not fit the customer | FINRA Rule 2111 (suitability); Regulation Best Interest for recommendations after June 30, 2020 | The new-account form (age, income, net worth, objectives, risk tolerance) against what was sold |
| The firm’s failure to supervise the broker | FINRA Rule 3110 | Exception reports, activity letters, prior complaints on the broker’s Form U4, the branch compliance manual |
A FINRA panel can award compensatory damages (out-of-pocket losses or market-adjusted “well-managed account” damages), interest, costs, attorney’s fees where a statute or contract allows them, and punitive damages in egregious cases. Claims must be filed within six years of the events under FINRA Rule 12206, and shorter state statutes of limitation may also apply.
If any of this sounds like your account, the next step costs nothing: a free, honest evaluation. Tell me what happened or call (719) 783-0303.
Common questions
Brokerage Fraud: what clients ask
How do I know if my losses were caused by fraud and not just the market?
Market losses hit everyone holding similar investments. Fraud shows up as a pattern specific to your account: heavy trading you did not ask for, investments that did not fit your goals, risks nobody explained, or trades you never approved. A review of your statements usually makes the difference clear.
Can I sue my brokerage firm in court?
Usually not. Almost every brokerage account agreement requires disputes to go to FINRA arbitration instead of court. Arbitration is binding, generally faster than litigation, and decided by a panel of arbitrators rather than a jury.
How long do I have to bring a claim?
FINRA rules generally require a claim to be filed within six years of the events behind it, and state deadlines can be shorter. Because the clock may already be running, it is worth having your account reviewed promptly.
Your move
A free evaluation has no downside other than your time.
Tell me what happened. I will tell you honestly whether you have a case worth pursuing — and every way I can be paid, including contingency: nothing unless you recover.