This post is written on behalf of Girard Bengali, APC.


On behalf of Girard Bengali, APC on Monday, March 11, 2019.

You could have put your money into a savings account and earned a fraction of a percent. However, you had time to be bolder, and you decided to look into investing for your future. The trade-off for a high yield is risking that your investment will not succeed. Perhaps you did research on the kinds of investments you wanted to try, but you likely depended on your brokerage firm to ensure you were taking prudent steps and not heading toward disaster.

While your California broker cannot protect you from every financial downturn, you should always be able to trust that he or she is looking out for your best interests. If this is not the case, you may end up the victim of investment fraud.

Is your broker trustworthy?

Your broker should understand your goals and your investment experience. If you are a beginning investor, your broker should take some time to educate you on what to expect and always be truthful about the risk involved in any investment. Even if you have invested in the past, you may be at a point where you cannot tolerate too great a risk. A broker with integrity should never force you into an investment or take chances you don’t understand. Other signs of broker misconduct include:

  • Working on commission, which means your broker may be inclined to push more expensive investments to earn a higher fee
  • Overselling a product, such as hyping it as a sure thing or hinting at having inside information
  • Promising an unrealistic return in a short amount of time
  • Rushing you to buy a product by suggesting you have a limited opportunity to invest
  • Encouraging you to drain your saving or take a loan to fund an investment
  • Encouraging you to falsify your application
  • Intentionally using industry terminology you don’t understand
  • Selling you a stock that goes up in value while its company earnings remain flat
  • Urging you to roll over your payout into a more profitable investment, which may indicate a Ponzi scheme
  • Hesitating or delaying the process when you request withdraws of your money

These are a few of the red flags that may indicate your broker is not meeting his or her duties toward you; they could also show that the brokerage firm has not done its due diligence in hiring and training trustworthy advisors. If you lose a considerable amount of money because of the misconduct of your broker, you may have concerns for your future. Seeking experienced help for a review of your case is your first step to dealing with broker misconduct.

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