Avoiding Stockbroker Fraud is the best way to protect your money.

Part 2: Identifying and Avoiding Stockbroker Fraud

Protect Your Money by Avoiding Stockbroker Fraud

In the first blog post in our blog series, we discussed the basics of what a stockbroker does and some examples of ways in which one can be victimized by an unscrupulous stockbroker. As we mentioned before, the types of stockbroker fraud we mentioned are not comprehensive. Rather, our blog is meant to demonstrate that there are numerous forms of stockbroker fraud. When in doubt, consult a qualified professional.

Now that you know to be on the lookout for potential stockbroker fraud, spotting it is not always as it easy as it may seem. A stockbroker intent on committing fraud often can disguise their misconduct through artful and convincing sales pitches. A Ponzi schemer, for example, has a goal of luring you away from your money by promising something otherwise unattainable, like extremely high rates of return. Many Ponzi schemers have defrauded even savvy investors out of millions – and even billions – of dollars.

4 Steps to Avoiding Stockbroker Fraud

There is no sure-fire way to detect stockbroker fraud, but the following tips can help you make sure that you and your money are being treated both fairly and legally:

  • Ask questions. Gather as much information as you can – if you don’t like or understand the answers, ask for clarification or seek another opinion. Stockbrokers are obligated to disclose not only the upside of investments but also the risks.
  • Get a second opinion. While brokers earn a living based on sales of stocks and other securities, any broker worth their reputation should not be afraid to let you perform your due diligence before investing. If you feel pressured to make an immediate decision, it may be because the person selling to you might not want you to uncover whatever it is he or she is trying to hide.
  • Do your homework. There are many ways to gather information, and you should use every means at your disposal. The Financial Industry Regulatory Authority (FINRA) has an excellent BrokerCheck tool where you can see if your broker or the firm has ever been accused of any wrongdoing.
  • When in doubt, consult a lawyer. If you are worried that something just doesn’t add up, or even if you just have questions, consult a qualified securities attorney who can help make sure that your account is accurate, and your investments are legitimate – and legal.

Even a savvy, experienced investor who has done their homework is not 100% safe from investment fraud; however, by following the steps outlined above, you can give yourself a chance to avoid being victimized.

Stay tuned for our final installment in our stockbroker fraud series in which we discuss what to do in the unfortunate event that you become the victim of stockbroker fraud.

Call a Stockbroker Fraud Attorney Today

If you have suffered a loss due to stockbroker fraud, you may have legal rights that require your immediate attention.
Contact an attorney today to schedule an appointment or consultation to review your rights and options.