In an unpredictable market, investments do not always have a desirable outcome. A bad investment can happen due to factors outside of the broker or the investor’s control. Unfortunately, in some cases, investors can lose money due to deceptive and unfair practices. Securities fraud can be difficult to identify, but there are steps that investors can take to protect themselves.
The first step is to do your due diligence when choosing an adviser or broker, even if they are highly recommended by a friend or relative. The U.S. Financial Industry Regulatory Authority’s (FINRA) BrokerCheck tool allows investors to investigate a broker’s credentials and employment history, including reports of complaints. Certain brokers are regulated by the Securities and Exchange Commission and will not show up in this database, but it is a good place to start to make sure you are working with a legitimate professional.
There are other red flags when it comes to the broker. If the broker has numerous complaints against them or recently changed firms, it is worth looking into the circumstances before making a commitment. Additionally, if they make unsolicited pitches through the mail or online, or their marketing materials are poorly produced, they may not be legitimate.
Review Investment Documents
When a broker approaches an investor with an opportunity, they should be able to explain clearly how it works and allow the investor time to review it. It is important to thoroughly examine an agreement to ensure the fee structure is clear, the risks are laid out, and the investor’s own information is correct. If the broker insists on signing or filling out paperwork on the investor’s behalf, or if they make statements that contradict the paperwork, this may indicate that they are not being honest with the investor.
If the investment has a high commission or it is unclear how the broker is being compensated, it is worth taking a closer look. Investors should trust their instincts and only invest in things that they understand, without being influenced by others. Often, scammers count on investors’ ignorance and willingness to buy into a group mentality.
Keep Tabs on Accounts
Once a partnership has been established, an investor should check their statements regularly and make sure they know the status of their accounts. Unusual activity, such as rapid buying and selling of investments, unauthorized investments, or a sudden decline in value could be indicators of fraud. No broker can guarantee results on an investment, and those promising high yields are often setting their investors up for disappointment. Brokers should always be available to discuss investments and answer questions; if they stop communicating, there may be a problem.
Securities Law Attorneys at Shepherd, Finkelman, Miller & Shah, LLP Handle Complex Securities Fraud Cases
There are several factors that can impact the results of an investment, and securities fraud can be difficult to understand or prove. The experienced securities law attorneys at Shepherd, Finkelman, Miller & Shah, LLP understand that every case is different. We will thoroughly review the facts of your case to determine whether fraud was a factor and tailor an aggressive legal strategy to help you obtain the best possible outcome. Call us today at 877-891-9880 or contact us online to discuss your case. Located in Pennsylvania, New York, New Jersey, Connecticut, Florida, and California, we proudly serve clients from areas all over the country.