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You may have lost money in your investment portfolio,
due to mismanagement and not even know it.

Due diligence: Trust a broker (maybe), but verify and monitor

"[S]cammers scam and liars lie."

And there's a compelling reason why they do so when engaged in fraudulent schemes aimed at taking money from the wallets of would-be investors.

That is this: Some people have been gullible from the beginning of time, and continue to be. For one reason or another, they are simply willing to posit trust in third-party financial pitches without doing some preparatory background digging first, and they often pay a staggeringly high premium for that.

In fact, notes the Federal Trade Commission, financial fraud-based complaints have spiked by about 60 percent over the past handful of years.

Even seemingly wary people with their "be alert" antenna firmly out occasionally get taken for the proverbial "ride" by con artists who are constantly developing new ruses or fine tuning longstanding classics like Ponzi schemes.

What can safeguard against those constant fleecing attempts?

Unsurprisingly, doing a little upfront homework. Regulators from the Financial Industry Regulatory Authority and state agencies cite several strategies that, when pursued in a timely and focused manner, can go far toward preventing financial losses induced by bad-faith brokers and other "advisers." Here are a few recommendations:

  • Use one of several online tools that scan brokers to see whether they are registered with the securities industry and have any outstanding complaints or disciplinary incidents
  • Don't invest in anything you don't understand reasonably well
  • Insist that an adviser provide you with all relevant written information available about any touted investment
  • Routinely look through and gauge the accuracy of all your financial statements in the wake of any made investments

And then there's this, of course: If you feel pressured at all or harbor any doubts regarding a third-party's assertions concerning an offered investment, just take a breath and back away. Better yet, consult with a securities law professional, who can help you vet a broker and any investment product.

Doing so will leave you well poised to make intelligent investment choices instead of taking unstudied actions that could hurt you in a major way later.

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Beverly Hills, CA 90210       
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