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Fight Big Business: Brokerage Scams

Posted By Jim On 03/14/2006 @ 12:43 pm In Investing | 1 Comment

You’d think the shady brokerage practices on display in Boiler Room [3] wouldn’t be something that still happened this day in age, with the strong arm of the SEC keeping houses in place… but you’d be wrong. Sure, brokerage practices might not be as illegal as in the Hollywood picture but brokers steering investors towards investments in the broker’s best interest, and not the investor’s, still happen. Did you know that a broker is obligated to sell you what fits your particular situation? Here’s what you can do if you sniff out that something that smells fishy.


By the way, these rules can fit anytime you run into any sort of scam where you think the front line (salesperson, broker, customer service representative) is working on his or her own and not according to the company “script.”

Get the supervisor. When this broker goes off the reservation, the supervisor is on the hook for the repercussions. Anyone who has deal with a CSR knows that going to the manager/supervisor is the first step if you can’t get what you want. Working with a broker should be no different.

If that doesn’t work, get a securities lawyer. Sometimes just getting the word “lawyer” into the conversation makes a company perk up and respond faster, even if you don’t have one. Of course, the reverse might be true but that’s more unlikely.

If your voice, even bolstered by the threat of a lawyer, isn’t getting their attention, get a bigger stick. Consider talking with your state’s securities regulator and if the situation is serious enough they will want to get involved. You can also file a complaint with the National Association of Securities Dealers (NASD) at complaint.nasd.com [4].

Ultimately, keep documentation at every step because if push comes to shove, you’ll need good notes.

via CNN Money [5].


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[2] Email: mailto:?subject=http://www.bargaineering.com/articles/fight-big-business-brokerage-scams.html

[3] Boiler Room: http://www.amazon.com/exec/obidos/ASIN/0780631536/ref=nosim/easeoftravel-20

[4] complaint.nasd.com: http://complaint.nasd.com

[5] CNN Money: http://money.cnn.com/2006/02/06/pf/fightback4_money_0603/index.htm

Thank you for reading!