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424-835-5733 | 310-525-3516

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

FINRA advice: watch your portfolio ... and your broker

Are you pals with your investment adviser?

There's nothing inherently wrong with that, of course, especially if your relationship is proven and long-tenured. Amicability and a bit of posited trust are positive factors in most interactions, and you might reasonably feel comparatively good about being on chummy and first-name terms with your financial professional.

Can you take that too far, though?

Federal securities regulators think you can.

In fact, officials with the Financial Industry Regulatory Authority counsel a bit of wariness on your part about being too intimate and readily trusting with any individual who manages your money. A FINRA principal focused upon investor education advises investors to stay ever-vigilant concerning their brokers "by keeping an eye out for signs of misconduct."

That is not selling your adviser short. Rather, it is merely looking out for your best interests in a realm where greed and passion can sometimes spur unlawful activity.

A recent "red flags" list authored by FINRA examiners of things to note in any investor's relationship with an investment adviser points to several potential concerns. They include these broker behaviors:

  • Reaching out to a client for a personal loan
  • Attempts to sell promissory notes
  • Supplanting formal business communications with personal off-the-record exchanges
  • Requesting that checks be addressed to entities other than directly to the financial entity that holds account balances

Those are just a few representative warning signs of potential broker misconduct from a far wider universe of possibilities. If they raise the antennae of an investor, though, that individual might reasonably want to promptly contact the adviser's business firm or an experienced attorney who routinely represents investors in securities law matters.

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