Disputes are common in the securities industry. Unresolved disputes can lead to costly litigation and other issues that compromise the reputation, credibility and success of the brokers or securities agencies. Though you cannot predict when disputes may occur, it is important for you to know the type that you may encounter as a broker in order to implement the right resolution tactics.
Securities professionals must follow certain laws and regulations for all transactions. Failure to do so can lead to fines, sanctions, criminal charges and other penalties. Read on to learn about two common types of securities disputes.
The laws regarding trading in the securities industry are specific. One requirement sets the frequency at which the purchase or sale of stocks or trades takes place in customer accounts. Brokers must follow all trading rules, regardless of what their personal or financial goals are. Some brokers violate multiple securities industry rules, laws and regulations for their own gain. Buying and selling stock or trades against the interest of customers for personal enrichment is churning. Churning is unlawful, unethical and can result in fines, reparations and regulatory penalties.
Breach of contract
Contract breaches are common when securities professionals violate the terms of their agreements with their customers or their place of work. It is not uncommon for some unsavory finance professionals to violate portions of or their entire contracts with their clients and employers for financial or professional gain.
Brokers have the experience, knowledge and skill necessary to mitigate the risks of the financial industry. They should not use their positions for personal or professional benefit. Customers who sustain losses or adverse outcomes due to the erroneous actions of a broker may file a claim for legal recourse.