How to Avoid Fraudulent Brokers

Have you been a victim of stockbroker fraud or misconduct?

Recognizing misconduct and How to Avoid Fraudulent Brokers.

At a time when the value of investment portfolios is declining, investors are wondering if they were properly advised by their brokers and brokerage firms.

Most investors lack the expertise to recognize stockbroker or brokerage firm misconduct, but there are things you can do if you suspect stockbroker fraud. The securities fraud attorneys at Dimond Kaplan & Rothstein, P.A. have both the investment knowledge and legal experience to help you understand what happened to your investment portfolio and whether wrongdoing occurred.

Our securities law attorneys help investors recover investment losses by holding brokers and brokerage firms accountable for their negligent and fraudulent investment practices.

Steps you can take to avoid becoming a victim

Stockbroker misconduct cannot always be prevented, but there are things investors can do to minimize the risk of serious investment losses due to fraud or unethical broker behavior.

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1. Investigate the Background of The Broker.

Background information about brokers is stored in a database called FINRA BrokerCheck®, which can be found at This database shows whether investors have filed complaints against the broker, how much money was paid to settle the complaints, and whether the broker has ever been fined or suspended.

2. Complete and Review New Account Forms Completely and Accurately.

When an investor opens a brokerage account, he or she must complete several forms, including forms that state the client’s investment objectives, risk tolerance, income and net worth. Brokerage firms rely on these documents to determine whether investments are suitable. If you later want to file a lawsuit alleging inappropriate investment recommendations, these documents will be an important support for your case. Investors should review these documents carefully to ensure that the information is accurate. Investors should not sign these forms in blank and allow brokers to fill in the information.

3. Review Account Statements and Trade Confirmations Promptly.

Investors should review trade confirmations and monthly account statements as soon as they receive them. Do not rely on account summaries prepared by a broker. A careful review of these statements and confirmations may reveal unauthorized and excessive trading.

4. Understand the True Purpose of A “good Luck” Letter.

When a brokerage firm’s reports reveal questionable account activity, many firms send a letter to the client commonly referred to as a “good luck” letter. This letter often instructs the customer to contact the branch manager if they have questions, without clearly indicating that the transactions on their account may involve questionable behavior by the broker.

Recognize this letter for what it is – a warning sign that you may have been the victim of stockbroker misconduct. Contact the branch manager and inform him or her of your investment goals and risk tolerance. Ask if there have been any account transactions that do not match your investor profile. If the branch manager identifies problems, request changes to correct the issues. You should also consider having the letter reviewed by an investment fraud attorney.

5. Address Questionable Activity Immediately.

Delays in contacting a broker or branch manager about account-related problems can reduce the likelihood of a successful claim of investment fraud or stockbroker misconduct. If you suspect questionable activity, address the issues with brokers and branch managers as soon as possible. Document your concerns in writing.

6 Close the Account

Last but not least, if you find misconduct by a broker, close your account, find another broker, and seek advice from an experienced securities fraud attorney.

Advocate for maximum recovery of your investment losses.

Contact an experienced securities fraud attorney at Assetsrepo for a free initial consultation on how to recover your investment losses.

We represent investors throughout the world in recovering investment losses due to stockbroker and brokerage firm misconduct and securities fraud. Call  Click here to report a scam


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