The penalties for insider trading are significant, and that alone acts as a deterrent for many. Some, however, like to push the limits or are simply naïve when it comes to the enforcement of SEC regulations. In any case, an experienced Tampa stock broker representation lawyer recognizes certain behavior that can be problematic.
The Broker Who Always Has Exclusive Tips
A stock broker is not permitted to make, buy or sell recommendations on the basis of material information that is not available to the public. Coupled with a broker’s duty to disclose all pertinent information necessary for an investor to make an informed decision, a stock broker who regularly offers information no one else has and isn’t forthcoming about its source is probably not playing by the rules.
The Broker Who Has a Cousin in Every Company
The SEC recognizes the extra scrutiny required when a broker has a close personal relationship with someone who possesses inside information. An individual must be very careful in these circumstances; even the most benign conversations regarding typical work-related issues can be considered tips that are not public and therefore illegal to trade on.
The Broker Who Has No Protocol in Place
Even for those who are acting completely in good faith, a Tampa stock broker representation lawyer will suggest it is unwise and risky not to have an established compliance system in place that is operational and enforceable. For some, this means the creation of a disclaimer that indicates the broker will not accept any insider information from any source. At a minimum, a compliance system that double checks the information to determine if it is public should be followed.
The Broker Who Engages in Other Questionable Behavior
Illegal insider trading is but one way a stock broker can violate ethical and professional duties. If a broker executes unnecessary and excessive trade, called churning, that may be a red flag. Another sign may be a recommendation to buy stocks privately without the involvement of the brokerage firm, which is called selling away.
The penalties for insider trading are significant, and that alone acts as a deterrent for many. Others, by nature, prefer to play by the rules and comply. Some, however, like to push the limits or are simply naïve when it comes to the enforcement of SEC regulations. In any case, an experienced Tampa stock broker representation lawyer recognizes certain behavior can be problematic.
Contact a Tampa Stock Broker Representation Lawyer for Legal Advice
You place a great deal of confidence in your broker, and in return he or she owes you high standards of professional behavior. If you have any questions regarding a broker’s manner of conducting business, call Robert Savage at 813-200-0013.