Securities Fraud can be defined as negligence or a misrepresentation or omission in connection with the purchase or sale of a security by an investment professional. Although everyone invests with the goal to increase worth, a losing investment does not necessarily equate to a cause of action against the broker for securities fraud, nor do gains on investments necessarily equate to the lack of a cause of action against the broker. A good broker, one who does not run afoul of the rules and regulations, is one who makes suitable recommendations, based upon the client’s needs, objectives and risk tolerance, not on the broker’s desire to be a hero. The greater the potential returns, the greater the risks; and unless the client has stated a need, tolerance, understanding and acceptance of those risks, the broker would be well advised to resist the temptation to be a hero by hitting a home run in favor of investing compatibly with the client’s profile.
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