What are the most common types of investment advisor misconduct?
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Well the investment advisor is someone that you have a fiduciary relationship with, which means that people go to an investment advisor and they entrust them with making decisions that are good for the person. And you generally tell the investment advisor what you’re looking for. Do you want aggressive stocks? Do you want to have a lot of risk? Do you want to diversify your portfolio? And you give them complete control over your investments. And often the type of misconduct that happens is the investment advisor doesn’t follow what you’ve told them. They don’t diversify your portfolio the way you told them to. They don’t make the trades you tell them to.
And often when it’s really a crime is they’re not acting in your best interest. For example, an investment advisor could have 100 clients and if 95 of them put in the same request to sell, let’s say IBM stock this investment advisor now knows that all these people are looking to sell this stock at a certain number and they could self-deal. Which means in their own account they could decide I’m as the investment advisor are going to sell you the stock and I’m going to make a profit now. That’s a very common investment advisor fraud.