While the stock market has been booming in recent years, 84% of stocks are held by 10% of the population. Despite this fact, there are millions of Americans that hold on to stocks and are no less susceptible to stock fraud than anyone else. Stock fraud can hit investors of all types, most especially those that aren’t as well versed in the world of trading.
Here are six signs that you might have been a victim of stock fraud that you need to look out for.
The promise of low risk-investment with a high return is an attractive offer to many.
Sadly, in most cases, these offers are nothing but an investment fraud designed to trick you out of thousands of dollars.
If you have been a victim of an investment fraud and don’t know what help is available to you, this article is for you.
You trusted your stockbroker with your hard-earned money. And it seemed like a great arrangement…at first.
Now, you’re worried that your stockbroker is committing fraud with your investments.
You’re not alone. In 2017, 66,873 cases of securities fraud and theft were reported to the United States Sentencing Commission.
When you consider the financial toll of a hurricane or other natural disaster, losses due to investment fraud is most likely not something you would factor in. However investment fraud following a catastrophic natural event is quite prevalent.
Many investors have found themselves in hot water after getting involved in investment opportunities related to hurricanes or other natural disasters. Scammers love using natural disasters to leverage investment fraud, as they are able to prey on vulnerabilities of both those directly affected by the event as well as those who want to help disaster victims.
In the wake of Hurricane Michael, you may receive unsolicited investment offers purporting to provide some type of opportunity for returns. These offerings may be related to disaster relief, clean-up, or even storm prevention. While it’s possible some of these offerings may be legitimate, chances are high that they are either too good to be true or a flat-out scam.
You know that the factors affecting an investment’s valuation go behind standard data and metrics. Often, an investment’s value can hinge largely on highly subjective factors, like public perception. The “reputation” of an asset or security can either signal an attractive investment opportunity or drive away investors.
You’ve probably heard of pump and dump schemes; a form of stock manipulation wherein essential information about an asset may be misrepresented or misreported in order to artificially drive-up its value before the scammer dumps their shares. In these types of schemes, fraudsters create a buy frenzy by promoting a stock as a desirable investment.
Well there’s also an inverse to this type of investment fraud and it’s called a short and distort scam.
We’ve all seen the news stories. Stock market fraudsters get caught running a scheme where people lose millions.
The most recent of these was Bernard Madoff in 2008. He tricked investors out of 50 billion dollars.
Most people have no idea they’ve been tricked until it’s too late. This doesn’t have to be you.
Regardless of your investing experience, nobody knows everything there is to know about stock and securities trading. That’s why you have probably enlisted the help of an investment professional, either as a sounding-board for investment decisions or to assist you in facilitating and completing transactions. An investment advisor or a broker-dealer can be a great asset as you build and diversify your portfolio.
However, for all the good they can do, an investment advisor who does not have your best investment interests at heart can pose a serious risk to the health and stability of your portfolio.
When you entrust the the management of your investment portfolio to a broker, that’s a big deal. If you are going to ask someone to assist you in managing your financial future, you are going to want to know that they have your best investment interests at heart. The relationship between you and your broker should be entirely founded on trust, honesty and transparency. And for many broker/investor relationships, that is true.
Unfortunately, we find that isn’t always the case.
Obviously, selecting a broker is no simple task; you don’t just pick a name out of the phone book and go with them. Finding the right broker takes research and due diligence. You want to know that your broker is properly registered and in good standing.
What is stock fraud, and how can you avoid it?
The world of stock fraud can be very confusing, and it’s easy to not realize that you’ve been part of a fraud situation until it’s too late. Although rules and regulations exist, the way you define fraudulent in the stock world is different from other types of fraud. It’s important to know what to watch out for so that you can protect yourself as an investor.
In this guide, we’ll give you a breakdown of some of the top types of stock fraud that you should avoid. Keep reading to learn how to keep your investments safe!
You know that stock investing comes with risks. Along with anticipated risks associated with the nature of stock trading, you also face risks associated with fraud. Some of the most widespread forms of stock fraud are carried out through fraudulent stock promotions.
In fraudulent stock promotion scams, fraudsters hype a certain stock to generate investor buzz. Once a buy frenzy occurs, fraudsters will quickly sell off their shares, leaving investors to take the hit.
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