When you hear stories about people losing their entire savings to a fraudulent financial adviser, people automatically think that the person “should have known better.” Hindsight is always 20/20, but when an opportunity presents itself that seems secure, many people opt to jump at the chance of making money for their future.
It is especially easy when the adviser comes as a recommendation from a friend or relative. It is easy to assume that due diligence has already been performed and that the investment is safe. It worked for Madoff, his billion dollar Ponzi scheme spread through word-of-mouth references only. So how does someone avoid fraudulent investments? There are a few things that you must do before turning over your money.
• Make the First Move
Never use a financial company that called you first. You should always initiate first contact with a financial advisor or investment company. When a “sales rep” approaches you first, there is more risk that it is a fraudulent investment.
• Do Your Research
Search the Internet for news articles and blog posts about the company or advisor. See what is being said about them. Check with your State Attorney office to see if there are any pending cases against them. Ask family and friends if they know anything about the company.
• Get Everything in Writing
Before you hand over your money, make sure that you know what your money is being invested in, what strategies are being used to achieve your goals, and what types of fees are attached to your investments. Get everything in writing first.
• Watch Your Investments
Make sure that your investments are performing at or near what you were told when you made the initial investment. Make sure that you are receiving regular statements about your account and verify the information with an online search.
What Happens If You Are Still A Victim Of Fraud?
Since nothing is ever 100 percent guaranteed, your investments may still be at risk. If you discover that you have been defrauded by a financial adviser or an investment company, you should seek immediate legal representation from an investment fraud attorney. The attorney can aggressively fight to reclaim your losses and pursue legal action for the fraudulent acts.
There may also be an insurance policy in place that your attorney can activate. Some of the larger investment companies offer SIPC (Securities Investor Protection Corp) coverage to their clients. Similar to FDIC protection, the SIPC will protect investments to a certain amount. However, you will most likely need the services of an investment fraud attorney to make the claim. The SIPC is very strict about paying out claims and you will need to prove that a fraudulent act took place causing you to lose money in your investments.
In the end, all people should understand that there are risks associated with investing their money. If there were no risks, there would not be any rate of return. This does not mean, however, that you should be careless. Just remember what your Mom told you when you were a child: “If it sounds too good to be true, it probably is a lie.”
Busy author, artist, and promoter Molly Pearce hopes to one day have her own investment funds and writes to raise awareness of cautionary steps to take as an investor. The Atlanta investment fraud attorney firm of Page Perry LLC., has a proven track record of success when it comes to challenging financial institutions for unlawful conduct on behalf of investors. Their 10 attorney firm has used a team approach to successfully handle more than 100 jury trials, over 125 appeals, and thousands of securities arbitration cases.
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