Protecting yourself against investment fraud and financial losses
You are your greatest asset when it comes to protecting your money from securities fraud or significant financial losses. Even if you’re working with a broker or advisor, homework is essential. Here are a few things to keep in mind when it comes to financial advisors and brokers.
Ask questions
Your best defense is an offense. Financial scammers do not want you to investigate. They’re counting on you getting caught in the hype.
Follow up with your own research
A fraudulent advisor has no interest in providing accurate answers. Always consider a company’s business and its products or service before investing. This means digging into the company’s financial statements. You can start with the SEC’s Edgar filing system.If you’re searching for information online be sure you fully trust the source.
Message boards, even company news releases should never be your sole basis for investing.
Press releases are designed to make a company or investment look good, and message boards are often used by fake promoters. Even reputable news sources can make mistakes and accept articles or information from inaccurate or unscrupulous sources.
Be cautious of unsolicited offers
Even if the offer seems legitimate or specifically related to your situation. For example, you’re contacted by an advisor who claims to be associated with your employer.
Investments may come from emails, message boards, even friends of friends on social media accounts. If you cannot find any current financial information about a company or product from an independent source it may be a sign of financial fraud. Also, watch out for “pump and dump” schemes and be wary of anybody recommending foreign or offshore investments. These can be ripe for financial fraud as it is much harder to locate money once you send it abroad.
Look beyond awards and rankings of the broker
Regularly check credentials, licenses, and registrations of the broker and brokerage firm, as well as a review of any previous or recent complaints and disciplinary actions. A trusted resource such as FINRA is a good starting point.
If you have questions about investment fraud, financial schemes, broker misconduct, or about your broker’s management of your account, please contact our Securities Law Firm at 313-334-7767 for a Free case evaluation.