Warning Signs of Fraud
Peiffer Wolf’s securities fraud and investor protection attorneys help investors across the United States in disputes against stockbrokers and brokerage firms.
We help investors recover financial losses resulting from stockbroker fraud, broker misconduct, and unsuitable investment recommendations. If you’ve suffered losses, Contact Us today by filling out a Contact Form or by calling 585-310-5140 to schedule a FREE Case Evaluation.
How To Spot a Bad Broker
Investors should proactively manage their accounts and investments by regularly reviewing them to stay informed of activities.
Review your broker’s regulatory history to see if there are any disclosures on their record by visiting brokercheck.finra.org.
Review and examine your broker’s investment advice and always ask questions for clarity of information that you may not understand.
Here are a few common red flags investors should look out for, according to the Financial Industry Regulatory Agency (FINRA):
- Guarantees: Exercise caution when encountering assurances of specific investment performance. All investments inherently entail a degree of risk.
- Unregistered Products: Numerous investment schemes involve unlicensed entities peddling unregistered securities, ranging from equities, bonds, promissory notes, hedge funds, oil or gas ventures, to spurious instruments like prime bank investments.
- Consistently High Returns: Investments displaying unwavering profitability month over month, or offering remarkably stable returns irrespective of market fluctuations, warrant scrutiny, particularly in volatile market climates. Even secure investments may encounter occasional setbacks.
- Complex Strategies: Exercise prudence when confronted with individuals attributing extraordinary success to intricate investment methodologies. Reputable professionals should be capable of articulating their strategies clearly. It is imperative to comprehensively grasp any investment under serious consideration, including its nature, associated risks, and revenue generation mechanisms.
- Absent Documentation: Securities transactions without pertinent documentation, such as a prospectus for stocks or mutual funds, or an offering circular for bonds, may signify dealings in risky and/or unregistered securities. The absence of stock symbols further raises suspicion.
- Account Irregularities: Unsanctioned trades, unaccounted funds, or other discrepancies in account statements could stem from genuine oversights or could indicate malfeasance, such as churning or fraud. Vigilance over account statements is crucial to ensure alignment with directives. Investors should also understand the custodianship of assets in their accounts. Whether the broker doubles as the custodian or an independent third party fulfills this role can significantly impact susceptibility to fraudulent activities.
- Aggressive Sales Tactics: No reputable broker should exert undue pressure to hastily decide on an investment or insist on immediate action. Any form of coercion to expedite investment decisions should be regarded with skepticism. Such coercive practices, even in the absence of fraudulent intent, are inappropriate.
If you believe you were a victim of investment fraud or broker misconduct, it is imperative to take action. Peiffer Wolf has represented thousands of victims, and we remain committed to fighting on behalf of investors.
Your losses may be recoverable if they were caused by your broker’s unsuitable investment advice or negligence. If you’ve suffered losses, contact us for a FREE Consultation.
Disclaimer: Peiffer Wolf does not contend to offer investment advice and the above should not be taken as investment advice. The information presented above is based on guidance from FINRA.
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Peiffer Wolf has helped thousands of investors who have suffered substantial losses. Contact Us by calling 585-310-5140 or by filling out an online Contact Form for a FREE Consultation.
