Posted in: FINRA | Greedy Brokers |
For whatever reason, there is a correlation between stockmarket conditions and stockbroker disciplinary complaints. Generally if the United States economy is faring well, investors are less likely to suspect brokers of fraud.
When the Dow Jones Industrial Average fell to a three-month low earlier this week amid the European debt crisis, we can assume more investors began scrutinizing broker activity.
Unfortunately, this trend is based around a common misconception. Bad brokers exist in any financial climate, and can harm investors at any time.
If we were to look at the worst stockbrokers in recent history, the ones who consistently ripped off multiple clients for thousands—if not millions—of dollars, we would instead notice that they do so inexplicably.
Jeffrey Southard, a former New Jersey-based stockbroker with ties to GunnAllen and Ameriprise Financial Services, was convicted last November of securities fraud. From 2003 to 2008, he convinced 14 clients—many of whom were elderly—to invest in $1.8 million worth of tax-free bonds. Those bonds did not exist, and Southard instead used the money on mortgage and car payments, private school tuition for his five children, and lavish vacations.
We can assume Southard was motivated by greed, but what compels a broker to lie and steal from senior citizens? Notice how he continued his illegal activities for years, through many market ups and downs, until a federal complaint in December 2008 finally stopped him in his tracks.
Then there is the case of Bernie Madoff, who operated the worst Ponzi scheme in history. He had fashioned a successful career in the securities industry spanning decades, and had even served on the Board of Directors for the NASD—now known as FINRA.
But even though he and his family and had enjoyed enormous wealth and success, Madoff would later perpetrate a fraud worth an estimated $36 billion. He targeted friends and family, fellow Jews, and members of his local community. His scheme may have started as early as 1999.
History has shown us that bad stockbrokers take advantage of investors’ trust and preconceived notions. If you are defrauded by your stockbroker, it is likely from the last person you’d expect, and when you would least expect it.
In fact, a market upswing would be an ideal time for bad stockbrokers to entice investors with guaranteed returns and other benefits that don’t exist. Stockbrokers are given so much power over our finances, so you should always be checking your statements for any irregularities.
If you suspect your broker has committed any wrongdoing, do not wait for another market collapse before taking action. Contact one of our attorneys for a free consultation of your case.
