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Signs That a Stock Broker Is Not to Be Trusted

Posted: Mar 31, 2015 | Posted in:

When choosing the person who will be responsible for protecting and growing the money you have spent a lifetime accumulating, it goes without saying that it needs to be someone you can trust. There are plenty of experienced, savvy and reliable stock brokers to choose from. But, steering clear of the ones that cannot be trusted is not always as easy as it seems.

How do you identify a trustworthy stock broker?

In this article, we take a look at some warning signs that a stock broker might not be the best choice for your investment portfolio.

Considerations for Choosing a Trustworthy Stock Broker

When choosing a stock broker, you can never ask too many questions. Seek recommendations from friends and relatives, talk to the broker’s references and take as much time as you need when speaking with the broker directly. Remember, you are making a major life decision. The broker should be open and honest with you and should be trying to earn your business. A hard sell is a tell-tale sign that someone is trying to get you to make a decision before you have all of the relevant information.

You should also question a broker’s intentions if:

  • They use complex terminology but are not willing to explain what they mean.
  • They guarantee you will not lose your principal or that you will achieve a specific return.
  • They offer “limited time” opportunities without sound market data.
  • They refuse to put anything in writing or they ask you to sign quickly without giving you time to understand what you are signing.

Keep in mind that these are not hard-and-fast rules, but rather guidelines for evaluating potential brokers. If you think you see some red flags, consider speaking with a lawyer or other qualified advisor before making any investment decisions.

Keeping an Eye on Your Broker

Once you choose a broker, you should continue to monitor him or her for any unscrupulous activity. The following are all potential warning signs of securities fraud and improper conduct:

  • Unauthorized trades
  • Questionable fees and transactions that have not been fully explained
  • Mislabeling of solicited investments
  • Investments that you do not understand
  • Failure to adjust investment strategies appropriately
  • A substantial drop in the value of your investment portfolio

If your broker either cannot or will not explain to you what is going on with your portfolio, you should seek help right away. Your broker is there to provide investment advice and make trades on your behalf. If you are being cut out of the picture, this is a sign that things may be going awry.

Zamansky LLC: Experienced Lawyers for Securities Fraud and Broker Misconduct

At Zamansky LLC, we focus our practice exclusively on helping victims of securities fraud and improper stock market losses. To speak with a securities fraud lawyer about your situation, please contact us today.