What is Stock Fraud and How to avoid it?
A stock fraud occurs when some false statements are made by the issuer of the security policy or important information is kept hidden that may affect the stock value. It makes the investors sell or buy the stocks under false claims. A number of ways are there by which a financial advisor or a stockbroker can break the laws related to investment practices. The stock fraud includes the misrepresenting stocks, risks associated with misrepresented stocks, a recommendation of the unsuitable stocks by an adviser or charging an extra fee for the transaction. Anything that is done against the policy is regarded as a fraud. What can the clients do? Being a client, if you assume that your stockbroker has given you wrong information or has acted improperly, you can file arbitration against him or the firm he works for. However, before you file a case against the broker, you need to make sure that he was at fault because, many a time, the investors need to face loss ...