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FINRA: Investors Must Be Wary of Fraud Artists Impersonating Registered Brokers and Advisors

October 30, 2020 Blog

As an individual investor, choosing a broker requires careful research. You need to choose a broker who can help you make informed decisions, who will act with your best interests in mind, and who lacks any history of complaints from former clients. The Financial Industry Regulatory Authority’s (FINRA) BrokerCheck tool is a good place to start; but, as FINRA has recently warned, running a search on BrokerCheck might not be enough on its own.

Whether you are considering a yield enhancement strategy (YES), an investment in Bitcoin or an initial coin offering (ICO), or a more-traditional investment opportunity, you need to do everything you can to make sure you can trust your broker. Here, our investment fraud attorneys provide their insights on FINRA’s recent warning about broker and advisor imposters.

Investors Must Do Careful Research to Avoid Falling Victim to Impersonation Scams

Investment scam artists are becoming increasingly sophisticated. In looking for new ways to mislead investors, some have begun to take the approach of impersonating registered brokers and advisors.

In concept, the scam is relatively simple: The fraud artist looks up the name of a broker who is registered with FINRA and then uses this broker’s information to solicit prospective investors. If a prospective investor performs a search on BrokerCheck, he or she will find information that matches that provided by the fraud artist.

While this type of scam is relatively simple, it can prove highly effective. In most cases, investors will not go beyond BrokerCheck when researching potential brokers or advisors—if they even go this far at all. Furthermore, if BrokerCheck “confirms” the scam artist’s identity, a prospective investor may not find it necessary to look for another source of verification.

However, in many cases, there will still be clues that point to a fraudulent scam. As FINRA explains, some potential clues include:

  • The “broker” is not located in the city indicated by BrokerCheck.
  • The “broker” is not able to verify information beyond that available through BrokerCheck.
  • The information about the security the “broker” is promoting does not match the information that is publicly available.
  • The “broker” requests that funds be wired to a bank or third party located overseas.

Registered Brokers and Advisors Commit Fraud, Too

Crucially, while these types of fraudulent scams are a very real concern for individual investors, investors need to be aware of the risk of legitimate brokers and advisors engaging in fraudulent practices as well. Broker and investment advisor fraud can take many forms, and there are far too many examples of investors suffering fraudulent losses with both new and well-established brokers and advisors.

Regardless of the circumstances involved, when faced with fraudulent losses, investors must act quickly to protect themselves. In many cases, it will be possible to recover fraudulent losses through FINRA arbitration with the help of an experienced investment fraud attorney.

Speak with an Investment Fraud Attorney in Confidence

Have you fallen victim to investment fraud? If so, we encourage you to speak with one of our FINRA attorneys right away. For a free, no-obligation consultation, call 212-742-1414 or tell us how we can help online today.

Client Reviews

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“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

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“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

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“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

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