borker fraud

Fraud in the Time of COVID-19: Red Flags of Investment Fraud

Apr 6, 2020

Whenever there is a stock market crash, such as in the COVID-19 stock market crash, fraud that has been hidden for years can come to the surface. This is particularly true for investment scams. This happened with Bernie Madoff. The stock market crashed, and people wanted access to their money. That was when they learned from the first time that the money they thought that they had safeguarded with Madoff was, in fact, just an illusion. It turned out that Madoff was running a plain old Ponzi scheme. When no new money was coming in to pay off old investors, Madoff’s multi-year Ponzi scheme finally came to light. The Coronavirus market crash will bring to light many investment wrongs and fraudulent or negligent conduct which has gone undetected during the great bull market. As long as investments were going up, many investors were not fully aware of unsuitable investments, improper margin risk, or fraudulent conduct. Scams Can, and Do, Happen Sadly, there are always going to be people who try to take advantage, who try to take shortcuts, who try to make an easy dollar, who try to cash in even if it means taking advantage of others. It does not matter whether you are a novice with finances or a very sophisticated investor. There are unscrupulous people out there, and when it comes to money, people often make the wrong, even criminal, choice. Of course, that is the reason why we have laws, and why there are regulatory bodies like the Securities and Exchange Commission (“SEC”) or FINRA to try to protect investors from the unscrupulous practices of some investment brokers.   That said, it is infinitely better to “nip something in the bud” before it becomes a problem that requires using FINRA, filing a lawsuit, or calling the authorities. The way to avoid investment scams, then, is to keep a sharp eye out for those “red flags” that tell you that there is something fishy going on. Below, we will discuss the 5 red flags of investment fraud that should help you separate those above-board investment brokers with those who might be trying to take advantage of your trust.     If, after reading this blog, you have additional questions on broker negligence or broker fraud, we invite you to contact broker fraud attorney Melanie Cherdack. Ms. Cherdack is a broker fraud attorney who understands the plight of those who were victims of investment fraud. As a former Wall Street attorney, she has “seen it all” when it comes to the schemes that investment brokers use to defraud their clients. We invite you to contact us today on our online contact form, or by calling 888-768-2499. 1. Promises of Unrealistic, Guaranteed or Excessive Returns. This first red flag is an important one to keep in mind. It is just human nature to want to believe something when it comes to growing your finances, even if it sounds too good to be true. Even the most stable investments will fluctuate when the market is volatile or is in “bear market” territory as the market is in now.   So, when your investment advisor […]

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