Miami Guilty Plea Highlights Rise in Stockbroker Fraud

Miami, FL While it is not clear if stock broker fraud actually occurred, the intent was certainly there on the part of a Miami man who attempted to induce a stockbroker to commit stock fraud. On October 29th, Jean "Richard" Charbit pled guilty to one count of conspiracy to commit securities fraud in connection with a scheme to defraud the investing public by manipulating the quoted share price and volume of a publicly traded company.

According to a November 1st press release issued by the US Attorney's Office for the Southern District of Florida, the defendant and others attempted to pay illegal inducement payments to a stockbroker to induce the stockbroker to misuse client accounts to buy worthless or overvalued shares of stock. Charbit and others did this to artificially raise demand for the stock, allowing the stock holders to dump their holdings into the market at inflated prices.

It is not clear if the stockbroker actually committed stockbroker fraud, or if the individual deferred and co-operated with the Federal Bureau of Investigation (FBI). However, there appears to be additional guilty pleas forthcoming in the case.

Stockbroker investment fraud is on the rise, partly due to the large volume of business common in this day and age, with more and more people using the services of stockbrokers and financial advisers to manage and direct their investments.

The Palm Beach Daily News of October 24th reports that Luis A. Aguilar, Commissioner for the Securities and Exchange Commission (SEC), revealed in a speech earlier this year that in 1999 there were 6,650 registered investment advisers managing $18 trillion in capital.

Today, a little over a decade later that august group has grown to 11,500 individuals managing about $33 trillion. In others words, about double the number of advisers and double the portfolio—in just over 10 years.

The Palm Beach Daily News notes that there are no specific laws outlining what a fiduciary is—but that is expected to change next year when the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July, comes into play. Section 913 of the Act requires the SEC to create a "suitability standard" for brokers, dealers and all persons selling securities.

Such a standard would have helped actor Larry Hagman, famous for his roles as J.R. Ewing on "Dallas" and as the hapless astronaut on TV's "I Dream of Jeannie" during the 1960's. Hagman recently won a stockbroker arbitration case against an advisor based in part on a breach of fiduciary duty. Such cases are aided and brought to conclusion with help from a stockbroker fraud lawyer.