Types of Investment Products
Learn about some common investment products before making a decision that could cost you in the future:
|Common Stock||Preferred Stock|
|Corporate Bonds||U.S. and Municipal Bonds|
|Mutual Funds and Closed-End Funds||Unit Investment Trusts (UITs)|
|Variable Annuities||Structured Products|
|Private Placements||Real Estate Investment Trusts (REITs)|
Typical Claims Against Your Broker
The vast majority of investor claims against their brokers fall into the following categories:
- Fraud: This occurs when a broker intentionally lies to a customer in order to induce him or her to purchase or sell an investment.
- Negligence: This claim alleges that the broker did not use due diligence, or care, and did not act in a reasonable manner when handling the client’s investments.
- Misrepresentation and/or Omissions: This claim asserts that the broker intentionally misled, negligently provided false information, or failed to disclose important information about an investment.
- Unauthorized Trading: This occurs when a broker makes trades without the client’s authorization or knowledge.
- Excessive Trading (Churning): This occurs when a broker engages in excessive buying and selling of investments in a customer’s account solely to generate commissions that benefit the broker.
- Unsuitability: This claim alleges that the broker invested the client’s money in a way that was inappropriate for the client’s investment goals.
- Failure to Supervise: Brokerage firms have a duty to supervise their brokers and ensure compliance with applicable State and Federal laws, as well as Industry rules and regulations. This claim asserts that the firm failed to implement procedures to ensure compliance.
- Selling Away: Brokerage firms perform due diligence in order to approve all investments that are offered. Selling away occurs when a broker sells, or solicits the sale of an investment not held or offered by the brokerage firms.
- Breach of Fiduciary Duty: Brokers have a legal obligation to act in the best interests of their clients, also known as a “fiduciary duty.” A claim for breach of fiduciary duty contends that the broker’s actions were not careful or loyal to the client, and therefore, not in the client’s best interest.
Financial Industry Regulatory Authority (FINRA)
FINRA is a self-regulatory organization that administers the largest forum for arbitration of securities claims in the United States. Arbitration is the most widely used means of resolving disputes in the securities industry.
- Click here for more information on the FINRA arbitration process.
- Click here for more information on the FINRA mediation process.
Check Your Broker’s Complaint History
You can check your broker’s complaint history at FINRA’s BrokerCheck website. Search the name of your broker and you will be provided with a report that discloses your broker’s employment history, qualifications, and history of customer disputes. Go to FINRA Broker Check.
Investor Bill of Rights
Go to the North American Securities Administrators Association (NASAA) website to learn more about your rights as an investor.
More Useful Links for Investors:
- Financial Industry Regulatory Authority (FINRA)
- Public Investors Arbitration Bar Association (PIABA)
- Investor Protection Trust
- Securities and Exchange Commission (SEC) Office of Investor Education and Advocacy
- North American Securities Administrators Association
Investor Education Resources:
- FINRA Educational Materials and Resources
- Investor Protection Trust Educational Materials and Programs
- Investing Basics from the SEC
- NASAA Investor Educational Materials
- NASAA Senior Investor Resources Center
- Financial Literacy and Education Commission
- National Financial Education Network Database
- Florida Office of Financial Regulation Investor Education and Protection
The Investor Rights Clinic’s content on this website is intended only to provide you with financial information and does not constitute financial advice. This content is general and does not consider your personal financial situation. The Investor Rights Clinic recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any significant financial decisions or implementing any investment strategy.