Tips to Protect New Investors from Securities Fraud Scams
Get Your Free Consultation
As reported in InvestmentNews, three Raymond James entities have agreed to pay over $15 million to resolve an investigation by the SEC. The settlement and SEC order focused on Raymond James’s actions in improperly charging certain clients advisory fees when the...read more
Fraud and investment scams are always a risk in the financial field. There are specific, problematic scams like Ponzi schemes, but there are more subtle scams and fraudulent practices that may cause financial distress even for savvy investors. New investors without the experience of having things turn bad in the past may not be able to as easily identify problematic pitches and comments from brokers or financial advisors – or those claiming to be financial experts. If you or someone in your family is considering becoming an investor, it is important to understand some tips that can help you avoid scams and fraud. Epperson & Greenidge’s FINRA arbitration attorneys explain some tools and tips that can help new investors avoid securities scams. If you were the victim of securities fraud or another scam, call our law offices today for a free consultation on your case.
3 Tools and Tricks to Avoid Investment Scams and Fraud
Many lawyers and financial experts may have different recommendations for avoiding fraud and securities scams. The lawyers at Epperson & Greenidge represent victims of financial negligence as well as more serious, intentional financial harm like fraud or identity theft. The following tools are time-tested and reliable methods that can help you avoid falling into traps and pitfalls that affect many new investors, and these tips may be able to help you avoid other investment issues short of fraud.
Check Out Your Broker
Nearly every broker and financial advisor in the US is required to have certifications and licenses before they are allowed to manage investments for others. These laws are put in place by the federal government’s Securities and Exchange Commission (SEC), but there are additional rules created by the financial industry itself. FINRA is the Financial Industry Regulatory Administration, an organization made up of financial experts, brokers, and investment professionals who create the standards for licensing and certifying other broker-dealers. If you are confronted with an investment opportunity, and there is a middleman offering to help you put your money into these securities, that person likely needs to be licensed.
FINRA provides investors with tools like BrokerCheck to research the broker they may be working with. BrokerCheck can show you not only if the individual has the proper licenses but if there have ever been claims or complaints lodged against the individual for fraud. This can help protect you from working with an irresponsible or predatory broker.
Read the Fine Print Before Investing
SEC and FINRA rules require certain disclosures. This means that much of the work you do with an investment professional may come with paperwork. These are not merely records or receipts, but often include notices regarding fees, agreements, and other things you need to know about your investments. If your broker fails to provide you with any documentation, that is a clear sign of danger. If they do provide you with paperwork, it may contain fine print to hide things your broker doesn’t want you to see.
Many issues like fees and conflicts of interest are disclosed in these kinds of disclosures. Reading up on the fine print will tell you whether your broker-dealer has any conflicts that may prevent them from giving you the best service they can and how their fees are structured. Some stockbrokers and other dealers work on a transaction-based fee, which may give them an incentive to churn out unnecessary trades without your knowledge to increase their fees. Finding these kinds of flaws in the agreement and notices early can help you avoid stepping into a trap.
Check Your Statements
Your accounts and portfolios will likely include monthly, quarterly, or annual statements or invoices regarding your broker’s activities and fees. It is important to review these statements closely, as they can help highlight unauthorized transactions your broker may have made on your behalf as well as any surprising fees you should not have to face. If your broker closed your portfolio in a manner that added fees or penalties, these fees and penalties should appear on the statements or invoices you receive. If you have been taken advantage of, you may be able to act quickly to restore your investments to good health or stop working with this broker.
Keeping good records of what your broker did on your behalf can help you see whether they were taking advantage of you or following the brokerage agreement. If you later need to file a claim for arbitration or file a lawsuit against the broker-dealer for breach of contract or any other problems, the information in your statements and records provides excellent evidence to support your claim.
Call Our FINRA Arbitration Lawyers to File a Claim Against Fraudulent Investment Brokers
Knowing how to avoid scams and fraud is important, but many brokers, financial advisors, and people posing as these professionals can still take advantage of you. If you or a loved one suffered financial harms at the hands of a negligent stockbroker or another investment professional, talk to the FINRA claims lawyers at Epperson & Greenidge today. We offer free consultations to discuss your case and help you understand how you may be able to seek compensation through a FINRA claim against your broker. For your free consultation, call today at (877) 445-9261.