Identifying & Avoiding Investment Fraud Can Help You Protect Your Money
In the first blog post in our series, we discussed a small sampling of types of investment fraud. Now that you know to be on the lookout for the potential for investment fraud, spotting it is not always as it easy as it may seem. Here, we talk about identifying and avoiding investment fraud.
Ponzi schemers (like Bernie Madoff, for example) have defrauded billions of dollars from savvy and experienced investors and a smart stockbroker often can disguise misconduct under the guise of something legitimate. Remember, these are professionals who often have vast experience and an extensive knowledge base.
It is important to keep in mind that investment fraud can come in many different forms so when in doubt, consult a qualified professional!
4 Tips to Identifying & Avoiding Investment Fraud
There is no sure fire way to detect investment fraud, but the following tips could help you in avoiding investment fraud and make sure that you and your money are treated both fairly:
- Ask Questions Be sure to gather as much information as you can – if you don’t like the answer, or the stockbroker or seller of securities doesn’t have a good answer, you should see this as a red flag.
- Get a Second Opinion Any broker worth their reputation will 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. Check the Internet for information about a particular investment, ask for any filings with the SEC (if applicable), and you should even check up on your broker. The Financial Industry Regulatory Authority (FINRA) has an excellent BrokerCheck tool where you can see if your broker or the firm has been accused of any wrongdoing and if they are properly licensed to sell securities. Note: If someone is trying to sell you securities without a license, that is a violation in and of itself.
- When in Doubt, Avoid the Investment If you uncover negative information, cannot get satisfactory answers to your questions, or if the sales pitch simply seems too good to be true, you should strongly consider not making the investment.
Doing your homework is the best way to avoiding investment fraud – but it is important to remember that the above list is not comprehensive, and cannot guarantee that your trust will not be abused.
Check back for our final installment in our investment fraud series in which we discuss what to do in the unfortunate event that you become the victim of investment fraud.
Are You a Victim of Investment Fraud?
If you have suffered a loss due to investment fraud, you may have legal rights that require your immediate attention.
With offices in Los Angeles our securities lawyers have helped investment fraud victims throughout Santa Monica, Beverly Hills, and Hollywood and recovered over $100 million from banks and brokerages firms for their wrongful actions.