What Is Mirrored Investing?

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Since 1999 our law firm has recovered more than $350,000,000 for victims of investment fraud and misconduct.
  • Jury Verdict Won Against Prudential Securities $262 Million
  • Recovered for 100-Year Old Widow $30 Million
  • Recovered in Retirement Losses $10 Million
  • Recovered for a Large Group of Individual Investors $6.5 Million
  • Recovered for Elderly Victim in Ponzi Scheme Case $3.8 Million
  • Recovered for Elderly Ponzi Scheme Victim $3.2 Million
  • Recovered for More Than 50 Families of Ponzi Scheme in California $3.2 Million
  • Recovered for 35 Families in Northeast Ohio $3.1 Million
  • Losses Recovered for 20 Retirees $3 Million
  • Recovered for Retired Physician Against Major Wall Street Firm Prior to Filing FINRA Arbitration $2.5 Million

What is It Called When a Broker Inflates Stock Prices?

A new social media trend is changing the way some investors manage their portfolios. "Mirrored investing" is an online investment strategy through which investors "follow" and "attach to" other investors. When the "followed" investor makes a trade, the "attached" investor's portfolio immediately "mirrors" the trade. All trades are adjusted to reflect the correct proportion of the trade in relation to account size.

Both brokerage firms and non-brokerage financial firms are beginning to offer "mirrored trading" to their clients. Advocates say it is an easy way for an investor who understands the importance of independent research and due diligence, but who doesn't have the time or capability to conduct it him-or-herself, to ride the coattails of successful investors who do.

There are a significant number of potential problems with the strategy, however, as highlighted in a recent article on USAToday.com entitled "Social Media Shapes New Investment Strategy."

First, the "followed" investor may have an investment strategy entirely unsuited for the goals and financial circumstances of the "attached" investor. For example, a 64-year-old near-retiree should not make the same trades as a 24-year-old whose primary goal is growth, no matter how successful the 24-year-old turns out to be. Second, there are a number of fees associated with mirrored investing, including per-transaction fees, which could really add up if the "followed" investor trades often.

Most importantly, however, is the potential for investment fraud. If a "followed" investor has a number of other investors "attached" to his/her portfolio, there is the potential for that person to artificially drive up the price of a particular stock. While firms may have safeguards in place to help protect against frauds of this sort, there is always the chance of misconduct when one person controls the investment decisions of another.

Understanding what "mirrored investing" is, and the risk factors associated with it, is vital in order to protect yourself from investment fraud. If you're considering participating in the new online trend, make sure you do your research first.

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Meyer Wilson has represented over 1,000 individual investors in high-stakes claims across the country, and has recovered over $350 million on their behalves. See what former clients have to say about our team.

  • “I primarily worked with Courtney Werning throughout the process and she was informative and knowledgeable. I trusted and fully recommend Courtney and her team.”

    - S.R.
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    - R.G.
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    - S.W.
  • “We went to arbitration with the other respondent and I got to see firsthand the level of professionalism and expertise the Meyer Wilson firm can deliver.”

    - D.V.
  • “Chad would take the time to call and talk with me. His explanations were always clear and concise. I also appreciate all the effort put into the details and statistics required to argue this case.”

    - P.N.
  • “Meyer Wilson was able to produce the results that we felt were obvious and warranted while several other firms and even state offices simply had trouble understanding let alone moving the case forward.”

    - B.K.
  • “My overall experience was positive and I would encourage anyone who even thinks they have been a victim of stockbroker misconduct to call David.”

    - S.T.
  • “Meyer Wilson represented me in a suit brought last year against my brokerage firm, securing a very fair and equitable settlement for me.”

    - R.G., M.D.
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