Fraud   Investment Fraud

Most investors do not realize it, but when they open a securities account, they typically sign away their right to recover damages in court. Brokerage houses routinely insert "arbitration agreements" into the account opening documents. By opening an account with an arbitration agreement, the investor agrees to seek damages in a specific arbitration forum. The most common arbitration forum in securities cases is run by the Financial Industry Regulatory Authority (FINRA) . Most often, the investor must proceed in this manner. A lawsuit in state or federal court is typically not an option.

FINRA has its own set of rules and procedures that differ from those of state and federal court. If you have suffered substantial losses as a result of broker misconduct, you should consider hiring an attorney who is familiar with these unique rules and procedures.

The most common examples of stockbroker misconduct are churning, unsuitable trading, unauthorized trading, and misrepresentations.

Churning occurs when a broker makes excessive trades for the purpose of generating commissions. For example, the broker may buy and sell the same security for a virtually identical price, thereby conferring little or no benefit to the investor but generating commissions for the broker.
Unsuitable trading occurs when a broker advises the investor to purchase securities that are not appropriate for the investor's objectives and tolerance for risk. For example, a retiree who seeks income from his or her investments should not be heavily invested in penny stocks that are highly volatile and produce no income.
Unauthorized trading occurs when the broker makes trades without obtaining the express authorization of the investor. Unless the investor has set up a discretionary account, the broker must obtain the investor's permission before making each trade.
Misrepresentation occurs when a broker makes untruthful statements in an effort to induce the investor to give permission for a trade.

Senior citizens are particularly vulnerable to stockbroker misconduct. According to the American Association of Retired Persons (AARP), one of every four senior citizens claim their stockbroker did not tell them how much their investments would cost. One in five claim their stockbroker did not inquire about their investment objectives before recommending various investments. Senior citizens are common targets for stockbroker misconduct because they have saved a significant amount of money for retirement.

K.O. Herston represents individuals who sustained losses as a result of stockbroker misconduct in all types of investments, including securities and commodities. He has participated in arbitration proceedings against most major brokerage houses. Mr. Herston is a member of an organization whose membership is committed to representing individual investors, the Public Investors Arbitration Bar Association (PIABA). Membership in PIABA affords Mr. Herston access to a nationwide network of lawyers equally committed to representing individual investors and helps him stay current with the latest trends and changes in investment fraud law.

If you believe you have sustained losses in your accounts because of investment fraud, please do not hesitate to contact K.O. Herston.

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