Stock broker scams are fraudulent tactics used by stock brokers to deceive their clients and illegally profit from their investments. Common scams include churning, unauthorized trading, “boiler room” tactics, and “pump and dump” schemes.
Churning is a form of stock broker fraud in which brokers excessively buy and sell securities to generate large commissions for themselves. Unauthorized trading occurs when a broker buys and sells stocks without first obtaining the customer’s permission.
Boiler room tactics are used to pressure customers into purchasing worthless stocks or stocks with limited potential for return. Finally, pump and dump schemes involve brokers artificially inflating the price of a stock before quickly selling it for a profit.
Investors should be aware of these scams and protect themselves by only investing with reputable brokers, regularly monitoring their accounts, and being wary of any unsolicited investment advice. It is also important to research any potential investments thoroughly before investing and to always ask questions if something doesn’t seem right.
