The problem is, certain ‘specialty’ investments pay the brokers who sell them very high commissions, making them exceedingly attractive to fraudsters looking to make a quick buck from an unsuitable sale.
Different Investment Types
Make sure you do your research about the actual risks and dangers of any investment your broker recommends before you agree to purchase it. Your broker may not be telling you everything, especially if he’s recommending you buy the following:
- Annuities: These are particularly dangerous for senior citizens because they lock away your money for a specific amount of time (usually years and sometimes decades). Additionally, some unscrupulous stockbrokers mislead investors to believe that a ‘variable’ annuity is a ‘guaranteed’ safe and secure investment like a CD or bond, but this is not the case.
- Exchange Traded Funds (ETFs): Normal ETFs can be fairly straightforward investments, but when it comes to Leveraged ETFs and Reverse-Leveraged ETFs, the volatility and risks are multiplied to the extreme. Leveraged ETFs and Reverse-Leveraged ETFs are highly unsuitable for the average investor who wants a long-term investment.
- Direct Private Placements (DPPs)/Limited Partnerships: The most recent scams relating to DPPs have involved the real estate sector. These investments can be highly illiquid and depend on the DPP, extremely risky. Such risks typically aren’t disclosed to would-be investors before making the sale, and if they are, most investors don’t have the experience to evaluate that risk.
- Mortgage Backed Securities: Mortgage-backed securities are often called “toxic debt assets,” and the massive fraud associated with them is typically referenced as the cause for our current financial crisis in the US.
- Real Estate Investment Trusts (REITs): REITs are a way for investors to buy and profit from real estate without the responsibility of owning property. However, these risky and often fraud-riddled investments are frequently and unsuitably recommended to retirees as a safe way to generate income.
- Reverse Convertible Securities: These might appear like safe, income generating, retirement investments; however, they are nothing of the sort. Reverse Convertible Securities (a.k.a. ‘nest-egg slashers’ always run the risk of getting converted into devalued stock, which is a danger that’s rarely explained when brokerage firms try to sell these investments to retirees and conservative investors.
- Unit Investment Trusts (UITs): UIT is when a company that sells unit shares of itself to investors. Essentially, when an investor buys a unit share of a UIT, he or she is buying into a basket of securities that contains a mix of bonds, stocks or other kinds of investments.
Don’t Take it on the Chin! Try and Get Your Money Back!
When a stockbroker or brokerage firm purposefully wrongs you, lies to you, or completely ‘drops the ball’ on your account, you deserve compensation for any and all damages that happen as a result.
State and Federal laws exist to protect investors from investment fraud; however, you must take action to preserve your rights and receive the compensation you deserve.
If you were financially harmed by your brokerage firm or stockbroker, or if someone in your family has been taken advantage of, compensation is available.
Stock fraud victims may be eligible to receive payment for:
- Investment losses
- Attorney’s fees and legal costs
- Punitive damages
No matter what state you live in, how old you are, whether or not you’re retired, and no matter what your nationality is, the Consumer Investor Resource Center can help. For a free and totally confidential consultation, contact the CIRC today. We will listen to your story, answer any questions you may have and discuss your legal rights and options.
Let us help you win the compensation you deserve.