3 Tips To Help You Avoid Securities Fraud

Posted on: 21 May 2018

Securities fraud can occur when a stockbroker or any other financial adviser tries to push you towards a specific investment with less than honest intentions. If you want to make sure you protect yourself while trying to invest your money, here are a few tips to keep in mind.

Always Do Your Own Digging

Yes, the reason you are seeking out investment ideas from a professional is because you don't understand the stock market much yourself. But that doesn't mean you should just accept every investment idea thrown your way without doing any research. At the very least, look up the company's name or stock ticker symbol and read through the recent headlines. Make sure the information you find matches up with what your broker or adviser is trying to tell you.

Look at the Adviser's History

Whether you are taking a pitch from a stock broker cold calling over the phone or talking to a potential new financial adviser at your local bank, you should do your homework on the person making the pitch to you in addition to looking into the stock they are suggesting. You ideally want to find a financial adviser with a long history of successful picks and someone who is correctly licensed to sell stocks or mutual funds in their chosen area of expertise. If you can't find this information easily or can't get them to give it up, move along to someone else.

Be Extra Cautious on Cold Calls

If you do receive a pitch out of the blue from someone by phone or email, you should take extra precautions. Dive deep into the caller's history and ask for information on the company they work for. If you like the sound of the idea, you don't have to buy it directly from them. If it's a legitimate idea, you can take the stock ticker symbol to your current broker for more information or do some research online. 

When You Should Get Legal Help

If you were pitched a bogus investment idea promising great returns that did not pan out, you might have been the victim of securities fraud. To be clear, losing money in the stock market happens all the time and just because you had a loss on a recent transaction does not mean that a fraud was committed. But if you later find out that the person that pitched the idea was up to no good, you might be able to go after them or their company from a legal standpoint. 

Contact a securities law attorney, like those at Carter & West Law, today for more information if you feel you have been the victim of securities fraud.