Securities Arbitration Lawyers BlogInvestors Beware: SEC Warns of Financial Professionals Making False Claims
Tips on how how to be alert so you do not fall victim to an investment scheme.
The old adage “don’t believe everything you hear or read” rings true in the case of a recent Securities Exchange Commission (SEC) Investor Alert. This particular alert warns investors about financial professionals that may misrepresent their backgrounds and professional experience to lure investors into investment schemes.
Fraudulent Information Abounds
How do these fraudsters go about attracting unsuspecting investors? According to the SEC Investor Alert, they use a variety of misleading methods. Here are just a few to be aware of:
• Misrepresentation of Education: Whether on their LinkedIn profile or on an offering memorandum for a fictitious hedge fund, there have been cases where financial advisors indicate having attended universities that they never actually attended. Or perhaps they attended, but the degrees they boast were never attained.
• Claiming Fictitious Award or Recognition: Believe it or not, in the Matter of Michael G. Thomas, Mr. Thomas, of Oil City, Pennsylvania claimed to be recognized as a “Top 25 Rising Business Star” by Fortune Magazine in email solicitations sent to potential investors. The catch? There is no such distinction offered by Fortune Magazine. To make matters worse, Thomas exaggerated his own past investment performance, allegedly lied to potential investors about who would be advising the fund’s investments and the potential profitability of the fund’s proposed investment. The name of the fund? A private fund named Michael G. Investments, LLC.
• Pretending to Hold Certain Professional Titles: One particular fraudster, according to the SEC (SEC v. Nickles), raised approximately $3 million through advertisements in prominent newspapers for investments that were presented as being insured or U.S. Government guaranteed. He claimed to be a certified financial planner. In both cases, the information was false. The funds were not invested as promised, and the fraudster was not, in fact, a certified financial planner.
Additionally, in another case, SEC vs. Homepals two fraudsters pretended that they were the company’s secretary and attorney, which in fact, they were not, and had never been.
What to Do as an Investor
While it may seem that you can’t trust anyone these days, that’s not necessarily true. There are plenty of legitimate and trustworthy financial advisors and investment professionals that can guide you and your investments properly. You just have to be a wise investor and do your homework. Here are some suggestions:
• Check out the financial professional’s history: Check with the Financial Industry Regulation Authority (FINRA), which is a non-governmental agency that regulates the securities industry. By visiting their BrokerCheck site you can gain insight into a financial professional’s history and any misconduct.
• Ask Questions: This is your money, and you need to be comfortable with who is handling it for you. Ask direct questions regarding credentials, however, do not take answers simply at face value. You must do your homework and learn everything you can about your investment advisor and the investment choices he or she suggests. For background information on investment advisers registered with the SEC, visit SEC Investment Adviser Public Disclosure for more information.
Have You Been Misled By a Fraudulent Investment Advisor?
In the event you have fallen victim to a fraudulent financial professional, unfortunately you are not alone. However, don’t despair. You have rights as an investor and you deserve the opportunity to recover any financial losses through securities arbitration. What you need in this case is an experienced securities attorney well versed in securities arbitration, and one with a strong track record in successfully recovering client losses.
The attorneys at Silver Law Group represent investors nationwide and are committed to helping investors recover investment losses through stockbroker misconduct. Our consultations are free and the firm is compensated only when we are successful in recovery. Contact us today to discuss your rights as an investor in greater detail.