I lost the majority of my retirements savings from being influenced by a Stock Broker to invest in a bad stock. Can I get help?

Question:  I recently lost nearly all of my retirement savings when I was persuaded by my broker to invest my money into stock that he basically guaranteed would triple my investment.  He told me that there were no real risks involved and that I would have nothing to worry about.  Six months later, I have lost everything.  What can I do?

Response:  First of all, it is important to note that every investment has associated risks – there is no such thing as a 100% safe investment.  When someone wants to make you a guarantee that you will make thousands of dollars without any risk involved, it should raise major red flags.  If your broker made false representations to you about the nature of your investment, he may be liable for stock broker fraud. 

In certain situations, a broker may try to sell an investor stock in a company that does not actually exist.  When the broker takes your money, he tells you that he is investing, but in reality, he is using the money for his own benefit.  The more investors he can convince to invest, the more money he makes.  If one of the investors decides to “sell” his securities, the broker would have to either give the investor the money by soliciting new investors or pay the investor himself.  Often times this kind of stock broker fraud, also known as a Ponzi scheme is successful until such a time that many people want their money back at once.  Since the stock isn’t real, there is nothing to be sold. 

After the stock broker fraud has been committed, there is very little that can be done for individual investors.  While you can file a complaint with the SEC and charges should be brought against the broker, there is no way of knowing whether the investor will ever get their money back.  The best way to protect yourself from stock broker fraud is to avoid high-risk investments that promise extremely high returns and to do your homework before investing with a particular broker.  FINRA, the regulator for broker/dealers in the US, has a service that allows potential investors to check the background and credentials of their broker.  Before you entrust anyone with your money, you should make sure that you know exactly who you’re dealing with.

Answered by D. Nicole Rosen

 Additional Resources:

Disclaimer: This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a Lawyer for your case.