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Warning Signs Of Broker Fraud

| Sep 14, 2018 | Securities Law And Litigation |

You count on an investment broker to not only safeguard your investments but to grow them into a comfortable nest egg for your retirement or other monetary goals. Partnering with a well-known brokerage firm with an excellent reputation seems like a great way to leverage your savings into something more substantial.

However, despite the great trust that investors across the United States place in their brokers, some investment accounts are irreparably damaged by investment fraud. Perpetrated by the exact individuals they trusted so much, the unfettered access investors gave brokers to their portfolios can easily turn into securities fraud. 

This is the case with the Louisville branch of Merrill Lynch’s, where a former broker continues to be under investigation for stealing clients’ money and making unauthorized transactions with their investments.

What can a brokerage client with little to no investment experience or knowledge do to protect their savings? Staying alert and engaged in your account activity may be all that you need to do.

Read on to learn about some warning signs that broker-initiated investment fraud may be occurring.

Unauthorized Trading

Unauthorized trading occurs when trades are happening without you consenting to them either on an individual basis or through discretionary authority. Staying aware of your account activity is a proactive way to spot trading activity you did not give informed consent to.

With commission-based fee structure, there may be an incentive for unscrupulous behavior by a dishonest broker that will repeatedly sell, then buy, stocks to earn more money. The key to spotting this behavior is staying plugged-in to your account activity and asking questions when something looks suspicious.

Foiling The Facts

Misrepresentation or avoidance of the facts about your investments in your portfolio is another warning sign that securities fraud may be afoot. Be careful of promises of the “sure thing” investment without the solid information to back it up.

Skewed Priorities

Knowledge of investment basics is good to have for optimum investment awareness. Some of the concepts that are advantageous to have a basic grasp of include:

· Investment risk tolerance

· Long-term financial goals

· Asset Allocation

If, despite your efforts to protect your investments from fraud, you have experienced financial losses due to illegal activity on your account, some resources that can assist you in possible recovery of lost funds. The Financial Industry Regulatory Authority (FINRA), the U.S. Securities and Exchange Commission (SEC) and other federal and state agencies investigate financial fraud, and attorneys experienced in litigating financial disputes represent investors to attempt to recover damages.