Illegal investment tactics are widespread and part of the ultimate desire of most American’s – to get rich quick. Sadly, if you are being sold a bill of goods that seems to good to be true, it probably is. Illegal investments can be perpetrated by stock brokers, major corporations and scam artists and it’s up to you to identify when you may be close to losing your money because of a scam. If you have been victimized, you can consider litigation against the person or entity that caused your loss.
One easy way for stock brokers to take advantage of you relationship of trust to pad their own bank accounts is churning. Churning means that a broker will engage is a high number of transactions for your account that are not in your best interest. As a result, they have an increase in commissions and fees and none of the transactions benefit you. Brokers can also use illegal investment tactics to convince you to make a decision to buy a stock. They may offer you misleading information or they may outright lie to you about the benefits or risk of a given stock so you’ll do what they want you to do. If you have a broker who can make transactions without your ok, you should always be on the lookout for unauthorized transactions – which are often a clue that illegal investment practices may be in play in your account.
In some cases, brokers can be colluding with an outside party for their own benefit. If this is the case, one illegal investment tactic is making unsuitable investment recommendations to you. For instance, if you are retired, they might encourage you to buy a deferred annuity – which might offer a high rate of return, but could be tied up with late penalties and fees for years to come. They make a commission and you are out several thousands of dollars you may need to live on. Additionally, they may be participating in insider trading, using information that is not public to encourage the purchase or sale of stocks.
As you can see, this is a mere sampling of the kind of investment fraud and illegal investment activities that can go on with a disreputable broker or company. We’ve seen, in the cases of Enron, WorldCom and HealthSouth that even the largest companies that appear to be the most profitable can be full of lies and fraud. If you are developing a relationship with a broker, make sure you have researched them thoroughly and that they are licensed, well regarded and completely above-board.
If you have been or are concerned that you have been the victim of illegal investment tactics, stock fraud or investment fraud there are a number of things you can do. First, you should contact an attorney. They can be your advocate if you need to see compensation or redress and they will know which parties you need to report your claim to, whether if be the SEC, the department of labor or even the department of justice. Don’t sit by and lose your life savings or nest egg to illegal investment tactics.