The Financial Industry Regulatory Authority (FINRA) recently released an investor alert about behaviors potentially fraudulent financial professionals often engage in. It’s important to keep a close eye on your investments no matter how much you trust your broker, and remaining vigilant throughout the course of your professional relationship can make the difference in spotting fraud before it has serious financial implications. Some behaviors FINRA highlighted include:
- Asking You to Write a Check to Someone or Something Other Than the Broker’s Firm: All deposits should be made directly to the firm itself, and you should immediately be wary any time your financial advisor pitches you an investment opportunity that requires you to write a check to either them or to a third party.
- Using Personal Email Accounts For Communication: Among the many ways FINRA protects investors is by requiring registered firms to maintain and preserve communication records between their members and investors. This documentation helps regulators and firms ensure that recommendations you receive are appropriate, and that your broker isn’t making false claims.
- Selling Promissory Notes: Promissory notes, while sometimes are legitimate forms of investment, more often are fraudulent and used as part of scams. These notes are primarily offered to accredited and corporate investors – unless you fall in one of those categories, you should proceed with caution.
- Asking for Personal Loans: Brokers are prohibited by FINRA to borrow money from their clients. If your broker asks you for a loan, you should contact their supervisor immediately.
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