You expect that a stock broker should be a professional representative of your financial interests. But it turns out that some so-called stockbrokers are just out to swindle your hard-earned money. They use cleverly packaged scams that might wipe out all your money if you don’t notice quickly.
Many traders in the stock market have lost lots of money to stockbroker scammers and it is understandable if you have been in this situation. Well, while it is never possible to be 100% safe, these tips on how to spot stock broker scams and avoid them will better prepare you to reduce the chances of being scammed so easily.
Watch out for suspect investments
If your broker has tried to sell you high-risk stocks or tried to pressure you into investment securities that you don’t really understand well then you have every reason to treat it for what it might be which is an outright scam. This is common among persons like widows or orphans because the broker scammers have learned the tricks on the right spots to touch given the vulnerabilities of such categories of individuals. A widow or an orphan feels vulnerable and might easily buy into an investment that sounds like it will take good care of their financial interests in the long term.
A legit stock broker must take time to understand your financial tolerance, experience, current, and future needs, and assured income potential. If they have not discussed these items with you and instead are just busy pushing you into what they describe as highly lucrative investments, please shut them out or even better report them to your local authorities or financial regulators.
Flag excessive transactions
If you have noticed some form of excessive trading in your account then please follow through and raise the alarm because the stockbroker might be out to scam you. You can spot this through multiple sales and purchases made on the same stock in moves that point to a scheme to pursue quick cash in profits within a short time.
This happens in arrangements where clients pay their brokers by commission. Commission payments tempt brokers to chase more money by attempting to execute several transactions without the client’s knowledge. Avoid this by keeping an eye on your account because the more the broker executes transactions that are not in your interest, the more you lose.
Never agree to open unnecessary extra accounts
Some stockbroker scammers are known to create illegal accounts, i.e accounts not commissioned by the client. They place your money in these accounts, then proceed to use the money for trading as if it was their own money.
This is a risky affair because once they succeed to place your money in these fraud accounts, they can come later and lie to you that your account incurred some huge losses while in the real sense the truth is that they have just taken your money. Never agree to proposals such as changing your address. Don’t agree to sign documents for opening a new account that is not your initiative.
Lost Your Funds To Scammers? Get Help Now
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