Penny Stock Fraud
Investors trust their brokers to make logical decisions for their financial welfare and to manage their funds based on the investors’ goals and needs. In many cases, investors hire a broker because they lack the sophistication and expertise to navigate the financial realm and to understand which investments are appropriate for them. Unfortunately, some brokers abuse this relationship by making decisions based on what will benefit the broker or the broker’s firm instead of what benefits their customer. In this situation, the investor can bring a claim against a broker or a firm to seek compensation for the financial losses that he or she may have incurred. At the Law Offices of Steve A. Buchwalter, we are ready to help you assert your rights against the broker who burned you. Los Angeles securities law lawyer Steve A. Buchwalter can help investors navigate these complex claims.Recognizing a Penny Stock Fraud Scheme and Asserting Your Rights
Penny stocks are stocks that trade below $5.00 per share and that are typically not listed on the New York Stock Exchange or NASDAQ. Also, these low-priced stocks commonly do not satisfy the SEC’s rules and regulations for listing on those exchanges. In most cases, penny stocks are acquired through an over-the-counter or OTC style transaction, which indicates that the stock is traded through a dealer network in lieu of a centralized exchange. The companies that most commonly offer penny stocks are those that are just getting into the market and are hoping to raise revenue quickly.
When it comes to penny stocks as an investment, there are frequently more negative aspects than positives. First, penny stocks may be easy to acquire, but they may just as quickly result in financial losses. Making them even more risky, penny stocks are traded very infrequently compared to other types of investments. If you lose a substantial amount of money after purchasing a penny stock, it may take a long time to sell the investment. During the interim, the investor will continue to absorb any losses associated with the penny stock. One of the most common scams associated with penny stocks is a so-called “pump and dump” scheme, which occurs when big-time brokers encourage investors to purchase penny stocks to create a large demand for them. The brokers secretly sell their stock during this period of high demand then wait for the penny stock to crash with their customers holding the bag. The brokers are the only ones who walk away from the transaction with any profit.
If a fraudulent broker has undermined your financial wellbeing by engaging in a penny stock scheme, you can bring a claim against him or her to recover compensation for your financial losses. Due to the complexity of managing investments and the trust that investors place in brokers, they have a fiduciary duty to manage a client’s portfolio in a manner that is in the investor’s best interest based on the investor’s individual goals and openness to risk. A broker who is deemed negligent maybe liable for the financial difference between the investor’s account before the broker’s negligent or fraudulent behavior and the actual value of his or her account after the negligent or fraudulent conduct.Discuss Your Securities Fraud Claim with a Los Angeles Lawyer
At the Law Office of Steve A. Buchwalter, we have assisted many Southern California investors with protecting their rights after a broker made careless or deliberately harmful decisions. Los Angeles securities fraud attorney Steve A. Buchwalter is familiar with how the investment industry operates and understands the federal and state laws that govern it. He serves investors in many cities throughout Los Angeles, Orange, and Ventura Counties, including Irvine, Pasadena, Santa Barbara, Beverly Hills, and Newport Beach. Call us or contact us online to set up a free appointment with a broker fraud attorney.