Trusting your money with someone else is not always easy. Nevertheless, if you are interested in investing using a broker or other investment professional, you may find yourself taking many matters on faith. The government has established numerous safeguards to protect consumers who invest in stocks, bonds or other securities through the services of a broker or advisor. Unfortunately, even these laws and penalties may not help you avoid becoming the victim of a fraudulent investment.
Investing is a smart way to make your hard-earned money work for you. Chances are, your investments are your security for your future, whether for the education of your children, your retirement years or for some other important goal you have set. Losing your money to an unscrupulous financial agent can be devastating, so you will want to take every precaution to recognize the signs that an investor may not have your best interests at heart.
Recognizing a predatory broker
Historically, the illegal and unethical actions of brokers have had devastating consequences on the national economy, so it is not always something that affects only one investor. Additionally, your experience with securities in the past may not always protect you from an unscrupulous broker. Some securities violations include investing in companies that benefit the broker instead of the investor, making excessive investments so they can collect more commissions and making investments that are inappropriate for your financial goals. Any of the following may be signs of an unscrupulous financial professional:
- A broker who pressures you to buy quickly, forces you to sign before you understand the product or presents an investment as a once-in-a-lifetime opportunity
- A financial advisor who refuses to supply you with investment information in writing
- Someone who approaches you with an unsolicited opportunity from a company with which you have no past dealings
- Offers of free gifts or meals to attend investment seminars
- An investment statement that contains unexpected changes for which your broker cannot provide an explanation
- A broker who is reluctant to answer your legitimate questions about an investment or who treats your questions or concerns as a nuisance
You have every right to be involved in the investment process and to understand what is happening with your money. Unfortunately, investments do not always earn money, and a drop in your profits does not always mean your broker is mishandling your funds. However, if you have concerns about your investments that your broker, advisor or your broker’s supervisor cannot satisfy, you may wish to learn about your legal options by reaching out to a knowledgeable attorney.