
Once upon a time, access to a broker was a luxury reserved for the rich. Brokerage firms have a list of potential clients their brokers can cold call to pitch stocks. The internet has changed that.
Now, individual investors can easily contact a broker online and start trading in no time. This, however, has not discontinued brokers’ use of cold calling to find clients.
Although it might be annoying, cold calling is legal, and you can stop it if you wish by adding your home or cell phone number to the National Do Not Call Registry.
Brokers are attached to a brokerage firm and may work on a commission basis. The pressure to earn more makes some of them dishonest. They might promise astonishing profit and guaranteed returns which is unethical. Stock investment is a risk, and the outcome cannot be guaranteed.
It is the duty of the brokerage firms to supervise brokers and ensure they are not acting out of line in their bid to persuade people to invest in a stock.
The Financial Industry Regulatory Authority (FINRA) regulates financial professionals and brokerage firms. FINRA Rule 3110 requires a brokerage firm to supervise all its brokers’ activities.
This means the firm owes a duty to investors who trusted their money with their employees.
The firm can be sued for failure to supervise if its employee is engaged in illegal activities such as theft, presenting misleading information to investors, unauthorized trading, etc., and the firm failed to enforce its supervisory procedures to prevent such illegal behavior.
FINRA can fine, suspend or ban a brokerage firm guilty of failure to supervise. For instance, the regulatory body imposed a $103 million fine on brokerage firms in 2021. Not only that, 655 brokers were also barred or suspended.
You may be entitled to compensation if you or your loved ones have lost money due to a firm’s failure to supervise. FINRA ordered a total of $47 million in restitution in 2021 alone.
Waste no additional minutes, get in touch with us today to get compensation for your loss. You can call us at (202)444-4222.
Fill out the form or Call us at (202)444-4222