What to Do if You Think Your Stockbroker Is Charging Excessive Markups or Commissions on Securities
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As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
Working with a stockbroker takes a level of trust. You could be trusting them to invest thousands, hundreds of thousands, or even millions of dollars of your money. Of course, a broker is permitted to take a fee for their services, but sometimes these fees and charges become excessive and suspicious. Some brokers may be involved in price gouging or other underhanded techniques which cause you financial setbacks or serious financial harm. For help seeking compensation for these kinds of errors, or for help understanding whether you’ve been victimized, contact our FINRA arbitration lawyers at Epperson & Greenidge today.
Is My Stockbroker Overcharging?
Many stockbrokers use fees that are charged for each transaction they make on your behalf. This means that the more stocks you buy or sell, the more your broker will make from serving you. If your stocks lie dormant for a long period, this may mean your broker doesn’t get many fees at all. Some brokerage agreements may deal with this by charging other fees, such as hourly charges for work done on your portfolio. In this system, there are some telltale signs of overcharging to look out for.
It is important to read your brokerage agreement and understand the fees you should be facing. When you start working with a stockbroker, you may need to sign a contract dictating the terms of the relationship and how the broker gets paid. This could dictate an annual fee, a retainer fee, hourly fees, or, more commonly, transactional fees. Many of the details could be hidden in fine print or within stacks of documents, which may make it hard to find what you should be paying. Regardless, if you end up paying more than was agreed upon, you may have a problem. If you are hit with additional fees, these could be illegal or unjustified expenses you never agreed to.
Since many stockbrokers are paid per transaction, they have a clear incentive to create as many transactions as possible. Brokers may step in and substitute their judgement for your own, buying and selling your stocks at will. These unauthorized transactions could cause damage to your investments, or at least constitute a breach of contract.
In some cases, this may even result in seriously unethical abuses. With per-transaction fees, brokers may go beyond a few unauthorized purchases, trades, or sales and make dozens or hundreds of transactions without your knowledge. This “trade churning” can mean you get stuck with a brokerage bill for each transaction. Some of these transactions may even be repeated buying and selling of the same stock, so that you don’t really lose money on the value of the stock – but that means you certainly lose money on transaction fees.
Getting Relief for Victims of Illegal Stockbroker Decisions
If you think your stockbroker may have used any of these techniques or otherwise abused your trust or your money, you may be able to file claims against the broker. Under state and federal law, you may be entitled to file lawsuits to recover compensation. However, these are often costly and may end up costing more than you might recover. Instead, consider turning to FINRA for help.
The Financial Industry Regulatory Authority (FINRA) is a Congress-approved board of financial professionals which essentially govern brokers and financial advisors across the country. They write standards for licensure and certification as well as the regulations and ethics rules for financial industry professionals. They also have a claims board, which gives investors who have been wronged a few options for actions to take.
First, you may be able to file a complaint against the broker. FINRA complaints may require further action on your part to provide evidence of how you were wronged, but are ultimately requests for disciplinary measures. This could lead to FINRA stripping the broker of their certifications or forcing them to take other disciplinary measures.
Second, if you want compensation for your financial harms, you may want to file a FINRA claim. This can either take you through mediation or arbitration, giving you an opportunity to have a neutral, third party examine your case and potentially recommend damages be paid. Mediation is non-binding, and either party can walk away whenever they want. However, arbitration, much like trial, produces a binding decision. If the arbiter decides you are owed money, the FINRA-registered broker will be forced to pay you damages.
FINRA Arbitration Attorneys
If you or a loved one suspects that your stockbroker is taking advantage of you by charging very high fees, talk to an attorney today. Things like high or excessive fees may be a sign of even worse abuses. For a free consultation on your case, contact the FINRA claims lawyers at Epperson & Greenidge, LLP today at (877) 445-9261.