5 Tips for Stock Fraud Prevention


Today’s society brings with it more and more opportunities for violations in online privacy, investments and cyber security. It’s happening at an alarming rate. In fact, from 2005 to 2009, securities fraud rose by nearly 400 cases, according to the FBI. Don’t become a victim of stock fraud. However, just in case, it’s always a good idea to know the contact info of an investment fraud lawyer.

Check out these five tips to preventing stock fraud from happening to you.

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  1. Be discriminating in whom you choose to manage your portfolio. Take the time now to conduct your own research, not only on the stock broker you’re considering but in the investments you’re looking to make as well. Never get so secure in your broker that you implicitly trust them regarding every investment decision. In fact, the Financial Industry Regulatory Authority (FINRA) allows you to look up the background of your stockbroker and brokerage firm to see if they have been charged with harming other investors. Check out: FINRA BrokerCheckto see if your stockbroker or brokerage firm has a history of stock fraud.
  2. Look into the broker’s or firm’s background. Check with federal and state securities regulators to see if there have ever been complaints lodged against the firm. Where is the company incorporated? How long has it been in business? Is there a current annual report on file with the state? Ask to see documents such as annual reports, prospectus reports and financial statements to verify information.
  3. Report scams immediately. If you sense you’ve been approached by a scam artist, or you have been noticing a disturbing or reckless pattern in your stock broker’s recommendations, report it right away. The longer it goes on, the more victims may result. You can file a complaint with the Securities and Exchange Commission, state securities regulator, or local law enforcement agency. Not only will this help bring justice to the offender, it will also help you get your money back quickly (if the fraud has already occurred).
  4. Read up on industry news. Yes, we’re all busy. We don’t have time to be bothered with the minutiae of our investment accounts. In fact, that’s why most of us hired a stock broker in the first place! However, you must be smart about your future, and that involves being well informed. You can gaina significant amount of understanding if you know the risks associated with your investments, as well as ROI. Read up on industry news, know what’s going on in the markets, review all of your monthly statements, and ask questions about anything you don’t fully understand.
  5. Be able to identify the various kinds of fraud. The following are all considered to be securities fraud and they are all illegal:
  • High yield investment fraud
  • Ponzi schemes
  • Foreign currency fraud
  • Pyramid schemes
  • Hedge fund related fraud
  • Broker embezzlement
  • Advanced fee schemes
  • Late day trading

Call Thomas Law Group for more tips, or to get help if you’ve become a victim of securities fraud. As lawyers that specialize in securities fraud, we can help you recover your losses.

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