financial fraud

FINRA Warns about Broker Imposter Scams

A few weeks ago the securities industry watchdog, FINRA, announced that it had received reports that scam artists had been calling the public and impersonating FINRA executes. This week, FINRA warned investors about a new scam: fraudsters who impersonate brokers and financial advisors.

Don't Become a Statistic: Fight Financial Fraud

It could be due to the fact that all day long pretty much all we do is speak to ordinary folks about how they lost their hard-earned money due to investment fraud and broker misconduct; write letters and FINRA claims about all kinds of financial scams and negligence; and educate ourselves on the latest trends in everything fishy and devious going on in the world of financial securities. BUT. This week, a couple phone calls we received and a couple articles we read brought home to us with powerful force once again just how many Americans get duped and how easy it would be not to.

photo credit Don Haskins, Creative Commons license

photo credit Don Haskins, Creative Commons license

See, one poor lady called us up to tell us she and her husband had lost $500,000 of their retirement money because of their broker. There was only problem. Their broker wasn’t a broker. He was an insurance consultant! The phony broker is now up on felony charges. But that doesn’t help the poor couple that called us… The fake broker was broke. And since he didn’t actually work for a sponsoring brokerage firm, well, there was no one to recover damages from.

Another case involved a gentleman who had lost a lot of money because his broker had put him in a bunch of assets that were patently unsuitable for the customer. As we talked, we discovered that the gentleman, in spite of the fact that the broker had lost a sizable chunk of his portfolio, had stayed with this broker and still, believe it or not, had his money invested with him! When we asked why, he said he’d listened to dozens of brokers pitch him on why they were the right broker for him, and they all sounded the same…

Finally, the FINRA Investor Education Survey report “Financial Fraud and Fraud Susceptibility in the United States” came out the other day, with some staggering findings. Some of the highlights (or lowlights, come to think of it) include the fact that:

  • Over 80% of respondents to the survey had been solicited in potential scams

  • Over 40% of respondents could not identify classic “red flag” signs of fraud

  • Around 60% of respondents under-reported fraud

  • Around 18% of respondents had been asked to purchase an investment that offered a commission for referring other investors.

Clearly, Americans are not nearly prepared enough to recognize and combat financial fraud schemes. As securities attorneys, we are often frustrated by the fact that we can’t help people until after they’ve been bilked out of their life-savings or taken for a ride by a phony broker. And so we wanted to take a moment to remind everyone out there who is or may become an investor that the old saying, “If it sounds too good to be true, it probably is,” is about the surest way to protect yourself against investment scams. We can all be tempted. Who doesn’t want to double their money overnight? Unfortunately, far more people lose all their money thinking that way than ever double it. Do your due diligence. Just because a nice man in a suit says he’s a broker, doesn’t mean he’s a broker. Do a background check on all brokers who solicit or trade for you with FINRA’s comprehensive BrokerCheck. For more tips, tools, and techniques in our collective fight against broker misconduct and fraud, please download our free Self-Defense Guide.

As always, if you or someone you know has the victim of broker misconduct or financial fraud, please contact us immediately for a free consultation.