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Thread: Tips for protecting yourself against financial fraud

  1. #1

    :box Tips for protecting yourself against financial fraud

    Tips for protecting yourself against financial fraud -

    1. Check the record.
    The Financial Industry Regulatory Authority, or FINRA, provides a free BrokerCheck system that lets you see whether or not a broker or brokerage firm has been accused of wrongdoing before. You should check any broker or brokerage firm before doing business with them. The site is available here.

    If you're checking a brokerage firm, you also want to make sure it's a member of Securities Investor Protection Corp., or SIPC. This organization is supposed to be a financial safety net for you if fraud is detected at the firm.

    2. Spread your risk.
    This is a controversial opinion, but you might think about spreading your assets among financial advisers or brokerage firms. This would create some complexity in managing your assets. Still, putting money with different firms gives you several benefits. First, you'd cut your risk in case of a problem at any single firm. Second, you can compare the performance of the firms and take advantage of different research tools each might have.

    3. Follow the money.
    Be absolutely sure you know where your money is, how to get to it any time, and keep track of what's going in and out of your account. Many frauds have a large degree of "trust me." That is, when asked for explanations, the perpetrators just tell you to trust them. Don't.

    Many reputable financial advisers use large brokerage firms, such as Charles Schwab, as their custodian. In other words, your money is actually held by Schwab or another large brokerage, not by your adviser. You have the account numbers and passwords and have complete access to your money. This is a good arrangement for the client, since it gives you optimum access to your funds. Ask a lot of questions if all your account statements come directly from a financial adviser who is not an SIPC member.

    4. Ask questions.
    If you see anything strange in your account, act immediately. Ask your adviser what's going on and if you don't understand the answer, ask the brokerage firm that holds the assets. Try to find other clients of the firm and stay in contact with them. And by all means, insist on getting reports from the adviser or brokerage firm at least monthly. Read them and store them in a safe place.

  2. #2
    candy girl Prissy's Avatar Prissy is offline
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    Nov 2009


    financial fraud , this ression really makin people do some strange stuff, its good to protect yourself, thanx posting this.

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