"Ask the Expert": Suspect Your Investment Broker of Fraud? Help Is Available, but You Need to Act Fast

Q: Please connect me with a law firm that is qualified to investigate a broker's misuse of an investor's funds.

A: Help is available if you suspect your investment broker of fraud -- but you need to act fast.

There’s no need to pay for a lawyer if you suspect your broker of fraud. The Securities & Exchange Commission, the Financial Industry Regulatory Authority, and your individual state government securities authority all investigate suspected broker fraud. After you file a complaint, a formal investigation of the broker or brokerage firm is triggered. If fraud is detected, the broker may be subject to formal disciplinary action, including suspension or loss of the right to sell securities, fines or even jail time.

In addition to filing a formal complaint, defrauded investors often hire their own legal representatives to help recoup their losses. Securities attorneys typically start the process by filing a complaint in arbitration (most brokerage firms require investors to agree to use arbitration, rather than the courts, to handle broker complaints).

But the clock is ticking: Busy doctors who don’t closely monitor their investment accounts and wait too long to complain about suspected fraud may find they have no legal recourse. Arbitration agreements typically include a statue of limitations on the amount of time investors have to file a fraud claim or lawsuit. These time limits vary, depending on the firm and the type of complaint. (Learn more about the arbitration process here.)

To find a local expert in securities law and arbitration, you can search the Martindale-Hubbell Law Directory, or contact your state or local bar associations. -- by Terri Cullen

Have a question for "Ask The Expert?" Email Terri at [email protected].