Fort Lauderdale, Fl.
Mutual fund switching is a common way for dishonest stockbrokers to defraud their clients when used to impose additional commissions. Switching a customer from one mutual fund to another when there is no legitimate investment purpose for the switch, is a violation of the FINRA rules of broker conduct.
Brokerage firms are required to supervise their brokers for unsuitable recommendations like switching investments. Switching occurs when a broker recommends selling one mutual fund to buy another. Some mutual funds carry high entry or exit fees and commissions which benefit the broker at the expense of the investor when the funds are switched. Many times, there is no reason for the switch.
Brokerage firms are required to notify their customers of the fees associated with each switch. According to Barron’s, LPL Financial recently agreed with FINRA, in a letter of Acceptance Waiver and Consent, to pay a $6,000,000 fine for improperly handling the switching of securities by its brokers. Among other things, LPL allegedly sent letters to its customers that misstated the fees involved in the switches.
In an investment environment where many brokers charge little or no commissions for transactions and ETFs have replaced high fee mutual funds, brokers are increasingly pressured to generate commissions. Sometimes the brokers recommend high fee mutual funds and/or encourage trading of options and stocks, Lately, some brokers are recommending non-traded securities, like real estate investment trusts (REITs) and private securities transactions, which are not suitable for many investors, while generally paying the broker 5% or more.
Don’t be a victim!
The Mark A. Tepper law firm has been recovering losses for investors for more than thirty years and can help you determine whether your investment or retirement loss was caused by your stockbroker’s violation of mutual fund switching rules.
Attorney Mark A. Tepper, is experienced in recovering your investment losses from switching or any other unsuitable recommendation. We offer a no-cost initial investigation and work on a contingency fee basis if we take your case. For help, please call Mark A. Tepper at (954) 704-2310 or email askmark@marktepper.com to contact our law firm.
You don’t have to be a victim!