It is a devastating experience to be defrauded by a brokerage firm that you trusted to handle your investments. Investment fraud comes in different forms, but they usually entail the stockbroker taking your money, which was intended for investing, and using it for other purposes instead. Some stockbrokers also sell nonexistent securities to unsuspecting investors. Ponzi schemes are another common type of investment fraud where the stockbroker promises high returns without actually making any legitimate investments. Luckily, there are different steps that you can take to prevent investment losses.
Here are seven tips to help avoid investment loss from your stockbroker.
1. Research Your Broker
You should research your financial advisor before entrusting your money to them. There are different things that you should establish about the stockbroker, such as their name, company, and contact details. You need to utilize an online tool to check self-regulatory agencies. This tool will help you to get the broker’s employment history and other previous customer complaints, if any. You can also ask your broker to provide you with the names of their clients so that you can contact them to get more details about the financial advisor.
2. Contact a Securities Lawyer
Many people who hire financial advisors to manage their investments do so out of faith, hoping that they will get the best rewards. However, this is not always the case since investment fraud often occurs, and many investors are caught unaware. Investment fraud constitutes a white-collar crime that is committed by brokers who design schemes to defraud unsuspecting investors. Such schemes usually appear legitimate, but the advisors misrepresent information for their benefit. The brokers ride on the investors’ trust. The problem is that investment fraud is not easy to detect, and you might not realize that you have been defrauded.
If you are a victim of fraudulent practices by the brokerage firm you had entrusted with your investments, you need to call your investment fraud lawyer immediately, an investment loss attorney is experienced in handling these types of cases and can help you recover your money. When you hire a professional lawyer, you can get some peace of mind knowing you’ll retrieve your money.
3. What Fees Does the Broker Charge?
You must find out all the fees that your broker will charge you before you invest. The first thing that you should do is to ask your broker for a detailed list of the fees that you should pay. You should also do some research and make sure that the fees commensurate with the market rates. If possible, you can try to get a stockbroker who offers competitive rates.
4. Scrutinize All Investments You Make
You should take your time to analyze all the securities presented to you by your broker. You must carefully analyze every investment that you make and try to create a fine balance between the risks and the rewards you are likely to get. If the investment presents more risks than rewards, it is crucial to make an informed decision so that you do not lose a lot of money. However, you should know that higher investment returns usually come with additional risks. Therefore, take time to evaluate every offer before you invest in reducing the chances of losing money.
5. Monitor Your Investments
You should review all the account statements that you receive and try to analyze different trends and figures. It is essential to make sure that you authorize all the trades and check if the activities in your accounts make sense to you. You need to ensure that there is no excessive trading or unauthorized actions on your account. If you suspect there is something fishy on your account, make sure that you get clarification from your stockbroker. You should carefully read all your financial statements and make sure that all transactions were authorized to help you identify suspicious activities.
6. Don’t Make Yourself an Easy Target
In most cases, investors with limited investment knowledge and experience are prime targets of fraudulent stock brokers. Therefore, you must always be alert when dealing with stockbrokers to avoid cases of fraud. If there is something that you do not understand and your broker is recommending it, you must ask questions and do not accept anything that isn’t made abundantly clear to you. You can also seek advice from other financial advisors before investing your money. If you have an investment loss attorney, you can contact them and seek guidance where you suspect that your stockbroker has deviated from the accepted standard of practice.
7. Be Diligent
You must be wary of suspicious sales pitches and promises offered by the stockbroker. For example, your stockbroker can recommend an investment that might seem too good to be true. You need to be watchful and avoid such deals that promise unbelievable rewards. If you are not happy with the way your stockbroker is handling your money, move your money to a preferred advisor to prevent investment loss.
Another important thing to consider is to have an investment plan for your future trades. In your plan, you must highlight the things that you can do differently and identify the factors that can help reverse trade position. There are detectable signs that you should closely monitor to ensure that your trade will not go against you. For instance, you must be good at identifying key market actions like price activity, volume levels, and changes in momentum. This will give you a clear idea of a trade that is not working.
When you decide to invest in security, the first thing that you should do is research your stockbroker. You need to establish your track record to ensure that you are not dealing with fraud. Furthermore, you must always keep an eye on your investments and be on the lookout for any suspicious transactions to avoid making yourself an easy target. If you suspect that you are a victim of investment fraud, consult a specialized attorney immediately. Your lawyer can help you recover your money as well as protect your future investments.