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A Big Name Firm Doesn’t Mean Little Risk

Trusting your investment portfolio with a big name firm may seem like a conservative decision. The common assumption is that the risk of investment fraud is lower with a big company versus a smaller brokerage. People frequently make the mistake of believing that investment fraud only results from the tactics of a scam artist, but it can happen even at the reputable firms.

According to a recent report, investing with a bigger firm could actually put you at a higher risk of fraud. The report, which was from the U.S. Securities and Exchange Commission (SEC), brings light to a problem facing investors. According to the report, which was covered by Investment News, 16 percent of fraud cases that were brought by the SEC involved broker-dealers. This number has gone up since 2008, as broker-dealers were tied to only 9 percent of fraud cases that year.

This report shows that scam artists aren’t the only culprits of fraud. Sometimes, the culprits are the large brokerage firms that many investors have come to trust. As an investor, it is imperative that you take the appropriate steps to protect yourself from fraud. For example:

  1. Closely monitor the activity of your account.
  2. Review monthly account statements.
  3. Don’t hesitate to ask your broker questions.

Educate yourself on the signs of broker fraud.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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