Stockbroker and Financial Advisor Embezzlement Attorney

Stockbrokers and financial advisors owe their customers certain fiduciary duties. One of those duties is to not steal your money.

How Stockbrokers and Financial Advisors Commit Embezzlement

Theft is theft, and stealing is stealing.   “Embezzlement” is technically the theft of money or something of value from one’s employer.  “Misappropriation” is generally where someone takes money for supposedly one purpose by uses it for another, and “theft” generally means taking anything that is not yours.

Technically, customer securities accounts not only belong to the customer but also belong to the firm who has a duty to safeguard these funds, not only from third parties, but to also safeguard these funds from their own agents.  So when a stockbroker steals money from their employer’s customers, it could be loosely characterized as embezzlement.   The best example is years ago when stockbroker programed the firm’s computer to deposit a fraction of dividends or interest to be credited to an secret account controlled by the stockbroker.

Misappropriation is also theft.  However, “misappropriation” generally takes place when funds are provided for one purpose but instead used for another.  The best example is where a customer gives a stockbroker a check to purchase an investment or to pay an insurance premium but instead converts or steals these funds for their personal use.

Stockbroker theft is also included in this concept. Stockbroker theft has been described as borrowing a customers funds without their knowledge or consent.  However, stockbroker theft also includes cases where a stockbroker may gather or solicit investor funds for a particular investment, but which is in fact a Ponzi scheme, or which the stockbroker uses for their own personal gain.

Securities broker-dealers can be held responsible for the embezzlement, misappropriation of customer funds by their agents, that they installed in a position of trust and confidence, but also based upon the failure to supervise.  For example, FINRA Rule 3012 regarding the establishment of a Supervisory Control System specifically requires all firms to establish, maintain and enforce written supervisory control policies and procedures that, among other things, include procedures that are reasonably designed to review and monitor the transmittal of funds (e.g., wires or checks) or securities.

Damages and Compensation for Victims of Embezzlement by Brokers

If your broker embezzled money from you or your investments, you might be entitled to financial compensation.

If your stockbroker took advantage of you and stole your money through embezzlement, you should consult with a lawyer immediately. Many firms and financial institutions proscribe a time with which you must notify them of any fraud or theft, even by third parties, or else your claims may be barred.  Stockbrokers who steal customer funds generally face civil penalties and criminal charges.

Generally, these cases begin with the stockbroker or financial advisor being terminated or discharged by their employer for “unauthorized” borrowing, or the sale of “unapproved” investments.  Following their termination or discharge, FINRA or the Financial Industry Regulatory Authority, will conduct an investigation, in which the stockbroker will generally not participate, resulting in a bar or expulsion.  Generally, the United States Securities & Exchange Commission may institute a Cease and Desist or civil proceeding, followed by, or simultaneously with an action by the United States Attorney or the Department of Justice (or even local law enforcement) bringing a criminal action against the stockbroker or financial advisor for mail fraud, wire fraud, or securities fraud.

The subject stockbrokers or financial generally plead guilty, they do not have any money or assets (and is generally why they stole the money to begin with to feed a gambling addiction or lavish lifestyle) and their former employs, the securities broker-dealers, defend these cases by arguing that they never authorized their stockbrokers or financial advisors to steal.

FINRA Arbitration

Customers or investors that are the victims of stockbroker theft, misappropriation or embezzlement, may file arbitration claims before Financial Industry Regulatory Authority or FINRA. 

Arbitration is very much a court-like proceeding, with a hearing or trial consisting of evidence, testimony, and a final award which absent the most egregious circumstances, is virtually unappealable.  In these cases, you need a lawyer to represent you throughout this process and fight for you to get you the compensation you deserve.

Call Our FINRA Arbitration Lawyer for Victims of Embezzlement by Stockbrokers and Advisors

If you were a victim of embezzlement committed by a broker or financial advisor, call The Guiliano Law Group today.  We have a long history of recovering compensation for victims of stockbroker theft, misappropriation or embezzlement.   If you believe that you may have a claim call our attorneys today at 1-877-732-2889.   All inquires are confidential, and we offer our services on purely a contingent fee basis, meaning we do not get paid unless we make a recovery for you.