Stockbroker fraud is a term that can be used to broadly define the abuse of a customer’s portfolio by a stockbroker, broker-dealer or investment adviser. Churning the account is probably the most widely well known abuse. The sale of unsuitable investments is the violation we see the most. Unsuitability can result from investments that are too risky or an over concentration of otherwise suitable investments.
For example, the type of trading and risk which is suitable for an executive in his 40’s, versed in finance and making a large salary is entirely different that what is suitable for the typical retiree who is living on fixed income and has a limited understanding of the field of investments. The former has the ability to replace lost capital while the retiree does not. Generally speaking retirees should be conservative and concerned with preserving capital.
As a guideline, if you are retired and have unexplained losses, large losses in a single security or other questions about account performance, you should have someone review your account.