Common Deceptive Investment Practices
Many investors are deceived by some so-called financial advisors who are
looking to promote self-interests and profits. May brokers and financial
advisors are really sales representatives who are paid fees and commissions
to sell investment products. Within the investment world, unethical brokers
and financial advisors have caused significant financial losses to trusting
investors. A securities litigation attorney sees deceptive advisors charged
with billions of dollars in fines every year for cheating or defrauding
investors. Common deceptive investment practices include:
Investment advisors may claim to have legitimate designations and certifications,
but many hold fake credentials. Real advisors are registered representatives
and investment advisors, while fake advisors have access to numerous combinations
of certifications that can be bought, not earned. Advisors often use numerous
initials after their names to promote professional expertise because most
investors don't take the time to validate credentials.
Misleading Investment Advice
Many so-called advisors give investors misleading investment advice. Advisors
who are not properly trained and licensed often lack adequate knowledge
about investment opportunities, conflicts of interest, and risks, and
they rarely perform due diligence. Most investors rely on their brokers
or advisors for expert advice, and misleading or bad investment advice
results in thousands of investment claims every year.
Undocumented Sales Claims
What investors don’t know about their brokers or advisors creates
some of their biggest financial risks. Selecting an investment advisor
based solely on verbal information is dangerous. Investors should choose
advisors based on documentation, rather than undocumented claims and sales
pitches. Unregulated advisors who have numerous complaints are not required
to disclose them to clients, and they often are allowed to retain their
licenses. A securities litigation attorney often sees convicted criminals
who obtain securities licenses.
Excessive Fees and Commissions
When an advisor puts his/her own self-interest above the client's,
it's often driven by the desire to maximize fees and commissions.
Recommending high-cost investments, using borrowed money for stock investments,
and excessive trading of a client's account all result in increased
fees and commissions for brokers and advisors.