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How to protect yourself from securities fraud

Author: Shelby Warden
Published: Feb 21 2013

Securities fraud concerns a wide number of illegal activities that involve deceiving investors and manipulating financial markets. Unscrupulous offenders try to make new ventures appear to be safe and sound investments, however, they always involve a great deal of risk.

Selecting Investment Advisers and Stockbrokers

Interview a number of investment advisers and brokers and listen very carefully to what they say. Get referrals from friends, business associates and relatives for consideration. Take each recommendation and note their differences. For example, how interested and responsive they appear to be about your questions and needs. Ensure that their investment philosophy is understood, as well as their service fee structure.

Reputation and Background

Check into all prospective brokers’ backgrounds. Determine their experience level in the securities industry and how long they have been with a firm or in business. Ensure that he or she has a stable employment history. Find out which firms they have worked for in the past and how often and why they have changed firms.

Review New Account Documents

Ensure that all of the documentation is understood before making any commitments. Read everything before accounts are opened and be certain to understand the fine print before signing anything. The fine print could cause problems if it is not taken into account. It is recommended to seek legal counsel if there is any question to ensure that you have a thorough understanding about how the account will work and what legal ramifications exist.

If any of your concerns are dismissed or minimized, that is a sign that you should do business with another adviser or broker. While he or she may not mean to cause harm, they should always be forthcoming about their services.

Account Statements and Trade Confirmations

Always review all materials from the brokerage firm including correspondence, account statements, trade confirmations and prospectuses. Ensure that everything is read promptly that relates to the brokerage firm and the account. Be careful to ensure that trade confirmations are correct since there is a limit on placing objections. Review the confirmation carefully and ensure that it is consistent with broker discussions.

Ask Questions

Listen carefully to everything your broker or adviser says and take notes. If there are promises made that seem too good to be true, they most likely are. If something doesn’t seem right, take action and get advice from a trusted financial adviser or securities fraud lawyer. Never commit to anything that does not seem like a good idea, especially if you do not understand it.

Monitor Accounts

Monitor how recommended investments and strategies align with your risk tolerance and goals. For example, if there is too much risk involved in a transaction, ask the broker why it is being considered. If you desire a conservative portfolio, there should be an explanation as to why something risky is even being proposed. Always ensure that he or she understands your particular investment objectives.

Never Ignore Problems

If you have issues with how your account is being handled, be certain to contact the broker or advisor to discuss it. If there is any attempt to shrug off your concerns, this could be a very bad sign. Firms and financial advisers should always be ready, willing and able to discuss all aspects of your account with meaningful and valid answers.

Any objectionable activities are bound to continue if they are ignored. Brokers who shows tendencies to break or bend rules usually continue this behavior. As a result, there will be further problems down the road.


If you feel that your account has been mishandled or that you have been misdirected, document the incidents with time, place, form and event details. Minor issues can be submitted by letter but always keep copies of what you submit and all responses.

Serious problems may need the advice of a lawyer. Contact a reputable securities fraud attorney if you believe there were any improprieties with regard to your account as soon as possible. This will ensure that discrepancies with your investments may be resolved to safeguard your financial assets. Shelby Warden is a legal researcher who writes articles to raise awareness in our communities. The securities fraud lawyer team of Page Perry, LLC has assisted thousands of securities abuse victims in recovering over $1.5 billion. Their team approach means that clients always have an attorney who understands their individual case and can offer them attentive and personal hands-on service.

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