Tips for Avoiding Investment Fraud
June 14, 2022
Risk is an inherent part of investing. However, one risk that investors often overlook is fraud. Investment fraud is, unfortunately, a common occurrence. Fortunately for investors, however, there are a number of ways to limit or eliminate the risk of falling victim to investment fraud.
Do your research – Articles, emails, news releases, and similar materials shouldn’t be your sole sources of investment research. Rather, it’s important to make sure you understand a company’s services, products, and business before investing. The SEC’s EDGAR filing system is a great source of information. For example, this resource allows you to review a company’s financial statements and other pertinent investment information prior to investing.
Ask questions – In addition to conducting your own research, when a financial advisor, broker, or any other investment salesperson brings up a particular investment, make sure to ask lots of questions. An inability or reluctance to answer your inquiries is a common sign that something may be amiss.
Look into the salesperson’s background – When dealing with an investment salesperson of any kind, make sure you spend some time looking into his or her background. For example, you should make sure that the person you’re dealing with is licensed to sell securities and investigate whether he or she has faced any previous disciplinary action. You can research this type of information on free databases provided by the SEC and FINRA.
Be cautious regarding offers – Unsolicited investment offers are a common sign of fraudulent activity. Such offers are often accompanied by promises of huge investment returns and other guarantees. If you receive such an offer, be sure to look into it using the research methods described above. Remember, if an investment opportunity sounds too good to be true, it often is.
Trust your instincts – Finally, trust your instincts when making investment decisions. If something doesn’t feel right about a particular investment professional or investment opportunity, then you’re probably better off looking elsewhere.
Fort Lauderdale Investor Representation Attorney
At Simms Law, P.A., one of our primary focuses is the representation of investors—including those investors who believe they’ve been the victims of financial fraud. Unfortunately, securities fraud has been a part of the United States financial system since the advent of the stock market. For the retail investor, securities fraud typically occurs when a broker or financial advisor misrepresents the risks and key characteristics of an investment, causing the investor to purchase an unsuitable security. At Simms Law, we always take our clients’ concerns seriously and are aware of what is at stake when an investor suffers losses due to financial fraud. If you suspect that any suspicious activity has occurred in any of your investment accounts, or if you believe that you have been misled about the nature and risks of any of your investments, please contact us today for a free consultation.