Copyright © 2011 Law Office of Neil D. Petkovic - Akron, Ohio Stock Broker Misconduct Lawyer, Stock Broker Fraud Lawyer | Site Design
Law Office of Neil D. Petkovic, LLC represents clients located throughout the State of Ohio including those residing in the communities of Akron,
Cuyahoga Falls, Stow, Hudson, Barberton, Canton, Massillon, Alliance, Cleveland, Parma, Rocky River, Westlake, Shaker Heights, Youngstown,
Warren, Boardman, Poland, Canfield, Medina, Brunswick, Lorain, Sandusky, Mentor, Toledo, Dayton, Columbus, Cincinnatti, Summit County, Stark
County, Portage County, Cuyahoga County, Medina County, Lorain County, Mahoning County, Trumbull County, Huron County, Geauga County,
and Lake County.
• Unsuitability – An unsuitability violation occurs when a broker
recommends an investment that is unsuitable to the customer
in light of the customer's age, financial situation, investment
objective, time horizon, and/or experience. If a broker fails to
adequately assess an investor's individual circumstances and
goals thereby making unsuitable investment recommendations,
the broker may be liable. Some examples of unsuitable
investments for conservative investors include start-ups, buying
on margin, over-concentration in particular sectors of the stock
market, and investing in high yield (junk) bonds.
• Churning/Excessive Trading – Churning or excessive trading
occurs when a broker engages in a pattern of trading that is
excessive in volume and frequency in order to generate
commissions paid on each trade.
• Unauthorized Trading – Unauthorized trading occurs when
the broker purchases or sells securities in a customer's
account without first obtaining the customer's consent.
• Misrepresentation and Omission – A broker may be liable
for misrepresentations and/or omissions by purposely providing
false or misleading information to customers or by concealing
material information. A violation may occur if a broker
misrepresents or fails to disclose: the risks of investing in a
particular security; the charges or fees involved; company
financial information; and technical or analytical information,
such as bond or securities ratings.
• Recommended an investment without
properly investigating the investment or
made exaggerated, unwarranted or
misleading statements concerning the
investment?
• Guaranteed future values of securities or
made price predictions or guarantees
against future losses?
• Engaged in excessive trading within your
account(s) which resulted in high broker
commissions?
• Entered an order without obtaining your
express and detailed permission prior to
the trade?
• Induced you to buy or sell a security based
upon a rumor?
• Misappropriated or embezzled funds from
your account?
• Recommended investments which clearly
did not conform with your investment
objectives or investor profile?
• Failure to Execute an Order – A broker may be liable for failing to use reasonable diligence to see that a
customer's order is executed at the best possible price, given prevailing market conditions.
• Overconcentration – Overconcentration occurs when a broker concentrates a customer's portfolio into a
single investment or type of investment, thereby creating an unacceptable degree of risk within the portfolio.
• Negligence – A broker may be liable for negligence by failing to act in accordance with the minimum
acceptable standards established in the securities industry. In other words, a customer may have a claim for
negligence if the broker failed to use reasonable care in handling the affairs of the customer, and did not act
as a reasonable and prudent broker or advisor would have acted. A broker who issues unfounded, incorrect,
deceptive, or otherwise misleading advice to clients, may be liable for negligence.
• Failure to Supervise – Brokerage firms are required by law to implement and maintain adequate compliance
and supervisory control procedures that are reasonably calculated to achieve compliance with applicable
securities regulations. Failure by a brokerage firm's management to so act is a failure to supervise. Further,
brokerage firms must follow the procedures and monitor the activities of its brokers.
• Early Retirement/72t – Often times, either by choice or corporate downsizing, people are confronted with the
prospect of taking an early retirement. Inevitably the first question one asks is "do I have enough money to
last for the rest of my life?" In recognizing that they do not have the expertise necessary to answer this
question, a person typically will seek the advice of a financial advisor or stockbroker. The advice that the
advisor gives can have severe repercussions. Too many times a broker will advise a client who is under the
age of 59 ½ years old that they have more than enough money to retire and can avoid paying a penalty on
their early withdrawals from their retirement accounts if they follow the parameters set forth in IRS Code
Section 72t. Electing to take 72t withdrawals is not a matter which should be entered into lightly, as the
ramifications of doing so incorrectly are harsh. If a broker has given negligent advice with regard to early
retirement or 72t distributions, that is actionable.
• Variable Annuity – A variable annuity is a combination insurance and investment product. There are several
types of claims that can arise from the sale of a variable annuity, including the suitability of the variable
annuity itself for the investor, as well as the suitability of the investment subaccounts and their allocation for
the individual investor. Additionally, variable annuities are often misunderstood by the very people who sell
them. If an advisor sells a variable annuity to an investor and misrepresents or omits material facts about the
annuity or its operation, that is actionable.
