Pricing Violations

Legal Guidance for Victims of Securities Fraud in Los Angeles

Securities law is very complex, and unscrupulous brokers and investment firms are constantly devising ways to deceive their clients to pad their own bottom line. Pricing violations are among the more common tactics for financial advisors who engage in securities fraud. If your broker sold you on a stock that was not worth the hype, you may be able to bring an action against him or her to get your money back. Securities law attorney Steve A. Buchwalter has years of experience serving residents of Los Angeles and the surrounding region who have burned by the their brokers.

Brokers Who Commit Pricing Violations Can Be Held Liable

Brokers who commit pricing violations have committed securities fraud. One of the most common ways is by illegally manipulating the price of a stock, either up or down, and then later selling or buying shares to make a profit. Brokers who hype up a stock to their clients, to newsletter subscribers, or on the Internet may be attempting to drive up the price so that they can later profit from shares of the same stock they bought for much less.

Another widely used tactic is falsely implying or directly stating that a security is being heavily traded, perhaps as a “hot stock.” This illegal practice may affect the price of a security, leading to ill-gotten profits.

One sign that your broker may be illegally manipulating the price of a stock is a refusal (or heavy resistance) to sell a stock you own. Although this in itself would not constitute stock price manipulation, it could be a breach of fiduciary duty.

California Law Prohibits Many Attempts to Manipulate Stock Prices

It is likely that a broker who devises a scheme to profit from the manipulation of stock prices has violated California law. For instance, Cal. Corp. Code § 25400 prohibits brokers and brokerage firm from creating a “false or misleading” impression that a stock is being heavily traded in order to induce a person to buy or sell that stock. Similarly, the same statute prohibits a broker from disseminating any information that would make a person think the price of a stock will rise or fall for the purpose of affecting the price of that stock. California law also contains a general prohibition against making false or misleading statements in the course of selling a security. Federal law, at 15 U.S.C. § 78i, contains similar provisions.

Although securities regulations are investigated and enforced by the California Department of Business Oversight or the SEC, both California and federal laws give private investors the right to bring a private cause of action against unscrupulous brokers.

Enlist an Experienced Ventura County Attorney to Fight Broker Fraud

Brokers may not lie, make misrepresentations, or otherwise induce clients to buy a security in order to manipulate the price. If you were deceived by your financial advisor about the alleged next “hot stock,” you may have the right to pursue a refund of your investment. Broker fraud lawyer Steve A. Buchwalter can bring a misrepresentation claim or a related cause of action for Ventura County residents and other investors across Southern California. He has served individuals from cities such as Beverly Hills, Irvine, and Santa Barbara. To schedule a free consultation, call 818-501-8987 or visit our contact page.