The sales, purchases, and exchanges of securities are a lucrative section of the economy. The Securities and Exchange Commission  regulates and enforces the federal securities law and has enacted numerous rules and reporting requirements with regards to securities. Securities fraud is illegal and is defined under § 10(b) as “any manipulative or deceptive contrivance” in the sale or purchase of a security, whether or not the security is publicly traded.

Unauthorized Trading

A broker must always obtain the client’s permission before any sales or purchases of securities are made. The failure of a broker to get the client’s permission is unauthorized trading. Clients who fall victim to unauthorized trading may have legal claims for the serious financial loss suffered at the hands of the unscrupulous broker.

Unsuitable Investments

Unfortunately, brokers frequently violate the fiduciary duty that is owed to their clients. The violation can occur in a number of ways. As a broker, that person holds himself out as having specialized knowledge in the field. Clients will reasonably rely on the advice of recommendations of a broker, sometimes to their detriment. If a broker knowingly or intentionally chooses unsuitable investments on the client’s behalf, the broker is engaging in unsuitable investments and could be held liable.

Over Concentration

Brokers also violate their fiduciary duty when they engage in the practice known as over-concentration. Diversification is a key component of investing, and when a broker does not sufficiently diversify the client’s investment portfolio, the broker could be held liable for over concentration.


Another common type of broker fraud is churning. Churning takes place when the broker “engages in excessive buying and selling of securities” in a client’s account for the sole purpose of generating higher commissions to benefit the broker’s own self interests.

Fraud and Misrepresentation

A broker can also be held accountable to the client for engaging in fraud or misrepresentation. And because brokers owe a higher fiduciary duty to clients than the ordinary friend or family member, a broker engages in misrepresentation if he recommends a particular purchase without first disclosing the known risk to the client.
For victims of securities fraud or broker fraud, Robert Robles can help to investigate the merits of the claim and recoup some of the money lost from the broker. Contact experienced attorney Robert Robles today at 405-232-7980.