Ruby McKenzie
If you thought that illegal activities and other suspicious moves by brokers ended with the last Great Recession, in this scenario, you might be making an assumption that could cost you a lot of money. Even though a great number of brokers are being sanctioned because of their wrongdoings, on the other hand, the rest of them remain undetected and unabated. So, it is crucial to check out the brokers and financial advisors before you decide to invest or do business with them. To teach you how to recognize the signs of broker fraud, we have prepared a shortlist of the most common ones.
Cold Contacts
If the broker or the investment advisor reaches you unsolicited from the agency or the company you have never done any form of business with, this can be the first indicator that something is off. This contact can take any form- letter, call, or email. You need to be extra careful when it comes to seminar invitations that promise free launches or any other type of gift that is meant to lure you into investing blindly.
Another key sign that something is not right is their selling tactics. For example, if they are using the high-pressure approach, once-in-a-lifetime opportunities, or refusing to send you any other kind of written information about the investment and the plan.
Imposter Websites
After reaching you and talking to you in investment, fraudsters will offer you the details of the fraudulent websites. Typically, broker imposter websites take information from legally registered investment professionals and then use the information to create fraudulent websites. The aim of these websites is to lure existing and potential clients to give them personal information and credentials. Some of the typical mistakes that should be signs that the website is a fraud are poor grammar, awkward phrasing, misspellings, and incorrectly used investor terminology. In addition, every investor should be aware that the name of the website can also be a sign. So, if the website uses the representative’s name as the domain name, you need to inspect it further before you decide to invest money.
Fake Documents
Another type of fraud that fake brokers usually use is documentation. Since they are well aware that their game will not be legit if there is no documentation proving their existence and operation, they easily fake the documents of their business. To this end, fake brokers create an illegitimate version of a public FINRA BroketCheck and use the records of an experienced broker with a spotless career. By using these tactics, they are able to lure candidates into their well-organized scamming scheme. In this line, if you find out that you, as the investor, are being a victim of the fraud, then you should contact a fraud or misrepresentation lawyer to consult with and take any other, further steps. Documentation, just as previously mentioned, cold contact, and fake websites are red flags you should not ignore.
You Cannot Reach the Seller
Just as they called you unsolicited, you will have a hard time communicating with the broker as well. Since you have no contact and no written communication, you should start suspecting it immediately. You will notice that when they get in touch with you, fake brokers will put all of their efforts into landing the immediate sale. If they succeed in their intentions and take your money, you will most probably never hear from them again. Normally, they will try not to leave any kind of physical trace so that they cannot be tracked. In addition, if they give you contacts, they will give you the ones you will not be able to reach afterward.
Investment Without Risks? Highly Susceptible
When trying to lure you into their web, fake brokers will give you an offer you cannot decline. One of the key tactics they use is presenting the program with little to no risk. If you are experienced in the business world, you will know that every single investment carries big risks. However, for these frauds, you will be presented with flawless programs that, in most cases, cannot even be put into action. So, it is smart to consult the board or partners before investing your money.
Unusually Large Profits
One of the classic fraudulent moves is to promise high returns and large profits. This is one of the smartest ways to grab other people’s attention and make them invest. Huge claims and large sums of money are the red flags you must not ignore. However, if you invest your money and find out it is a fraud, then you need to try to withdraw it as soon as possible. Unfortunately, most fake brokers make it impossible for traders to take back their money.
Broker fraud has not stayed in the past. On the contrary, these actions are quite common. You may see that these frauds happen almost every single day. Normally, fake brokers will not go for experienced businessmen but for inexperienced people who know little about investing, making them perfect victims.
