Glossary of Terms
A process in which an investor files a claim for recovery of lost investment funds against a broker or brokerage company. The claim may settle or proceed to a hearing before a three-member panel of arbitrators.
A broker's act of turning over an investor's account in excessive sizes or frequencies solely for the purpose of generating commissions.
A period of time determined by law in which an investor can file a claim in an arbitration forum after the investor discovers that he or she has a claim to pursue. The length of the eligibility period varies according to the particular case.
Failure to Supervise
This occurs when a brokerage firm fails to supervise its individual brokers and its recommendations to investors to ensure compliance with and prevent violations of the rules of the securities industry.
The highest standard of care a broker owes to an investor client, based on the level of trust and confidence in the broker's expertise.
A breach by the broker of his duty of good faith not to misrepresent any "material" fact - a fact that addresses the nature or quality of the investment or the degree of risk involved - to the investor in the sale or recommendation of an investment.
National Association of Securities Dealers Registration (NASDR/NASD)
The National Association of Securities Dealers Registration is a company of the National Association of Securities Dealers. The NASDR/NASD are national organizations regulating the securities industry for the benefit and protection of investors.
Similar to a misrepresentation, an omission occurs when a broker has failed altogether to disclose a fact material to the investor's decision-making process.
This is the failure by a broker to diversify an investor's portfolio to provide protection against a decline in value of one particular investment.
State (Ohio) Division of Securities
A state level organization that oversees the securities industry. The Ohio Division of Securities is responsible for providing investor protection and enhancing capital formation by administering and enforcing Ohio's securities laws.
Statutes of Limitations
Periods of time defined by state law in which an investor can file a formal securities fraud lawsuit in a court of law after the investor discovers that he or she has a claim to pursue. The length of the statute of limitations period varies according to the particular case.
A broker who buys or sells securities in an investor's account without the prior consent of the investor has engaged in unauthorized trading.
If a broker recommends an investment not in alignment with the investor's financial situation, investment goals and objectives, future needs, and risk tolerance, the broker may be held liable for losses from an unsuitable recommendation.