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Are You a Victim of Broker Fraud?

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When an individual takes another individual’s money, or assets, by means of deception or criminal activity this is known as financial broker fraud. Financial fraud may present itself in many forms, and individuals may not realize they are victims until they lose their investment.

There are many ways individuals can protect themselves from being a victim of fraud before they invest their hard-earned money like – asking detailed questions about the investment, speaking with other investors and looking up the financial advisor on BrokerCheck.

What Is Securities Fraud?

Securities fraud is also known as broker fraud. In today’s global economy when it comes to building wealth — buying, selling, and trading securities are a common thing. When it comes to any type of retirement or investment account it is usually handled by financial advisors, also referred to as brokers, who are licensed to sell securities. Unscrupulous financial advisors may try to take advantage of their clients by presenting high risk or fake investment opportunities. Anyone is at risk of becoming a victim of fraud because some brokers and other financial professionals who handle investment portfolios may be more concerned with making themselves profit than their clients. Individuals over the age of 65 are statistically more likely to become victims as they typically have more investable assets than younger individuals. If you believe you are the victim of securities fraud or an investment scam, you should immediately report the broker to FINRA, the Securities and Exchange Commission, and contact a lawyer for legal advice. 

What Are the Signs of Stockbroker Fraud?

 Unethical brokers prey on both casual investors and experienced investors. Even though FINRA and the SEC have put regulations into place, and made it mandatory for brokers to make certain disclosures to their clients, there is still a strong risk of broker fraud. The reason why is because brokers who are fraudsters know how to make it look as if they are following the rules; however, in reality, they do not care about the rules that the have put into place. They are simply interested in making money for themselves. 

There are some warning signs that investors can look for to set off an alarm that they are potentially being scammed. Investors should look to see if their broker has disclosures on their BrokerCheck report. The BrokerCheck report is an online database that contains information, both negative and positive, about broker. These reports are accurate, and maintained by FINRA . The type of information found in the BrokerCheck report is if the broker has lost a job, filed for bankruptcy, has received customer complaints, has been subject to arbitration proceedings or regulatory actions, or has been subject to civil or criminal proceedings in court. 

Below are more red flags that may suggest that your broker is potentially scamming you:

  • If you have a broker that is either making trades or investments without your consent; 
  • If the broker is refusing to make the trades that you have instructed them to make; 
  • If your broker is making trades in high volumes in order to make him /herself commissions; 
  • If your broker is making investments and cannot explain the investment; and 
  • if you are experiencing unexplained withdrawals or losses in your account without your consent.  

Steps to Take If You Suspect Broker Misconduct of Fraud

 The first step you should take if you suspect broker fraud is to contact the broker and branch manager to see if the discrepancies can be thoroughly explained to your satisfaction. If neither one of these individuals can explain the discrepancies and insist that the investment losses are because of the market performance, you may have an issue. You should then contact FINRA and/or the SEC for assistance. Finally, your next course of action should be to seek the assistance of an attorney and let the attorney fight you battle against the broker and the brokerage firm.


Contact Schwartz Investor Advocates today for more information!

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