Is Stock Fraud Avoidable?
Nowadays, investing in the stock market does not come without its own risks, and it is so easy to be drawn into fraudulent, underhand dealings without you knowing.
When first starting out in stocks and shares, the majority of us employ a private broker or brokerage firm to advise us, and act on our behalf, when making an investment. Unfortunately, for many of us, the trust we put into our broker is abused and our ‘trusted’ broker uses our money to fund themselves, which puts our money at risk.
More and more cases of fraudulent, underhand dealings are coming to light and both private, independent brokers and large organizations are guilty of committing fraud.
When you are first looking for a broker or organization, it is important to do your homework. Ask for references from previous clients and above all, before handing over any of your hard earned cash, ensure every detail, of every deal, is presented to you first. This way, ‘You’ make your own decision on whether or not to invest. Never sign a contract allowing your broker to act on your behalf, without your authorisation first, in doing so you will put your investment at high risk. Many brokers are found guilty of investing in high commission stocks – lining their pockets and not yours and using your savings – at your risk! It is law, that a broker presents all relevant paperwork regarding any deal to the investor before making an investment.
Stock fraud can easily be avoided if you are cautious from the start. Once you have found a firm or broker, ensure you talk to your broker personally regarding all investments. If you think your broker is withholding information or you feel you are being pushed into a investment then proceed with caution. Remember, there are no ‘to good to be true’ investments!
Understanding Stock Market