Don’t Be a Victim: How to Protect Yourself from Investment Fraud Before It’s Too Late

I spend my days helping people recover from investment fraud, but I’d rather help you avoid becoming a victim in the first place. Prevention is always better than trying to get your money back after it’s gone.

Let me share the most effective strategies for protecting yourself from investment scams and broker misconduct.

The Golden Rule of Fraud Prevention

If it sounds too good to be true, it probably is. This simple rule could save you from 90% of investment scams, but people ignore it because they want to believe in get-rich-quick schemes.

I’ve seen brilliant, successful people lose everything because they abandoned common sense when presented with “exclusive” investment opportunities.

Research Before You Invest

Check your broker’s background – Use FINRA’s BrokerCheck to research any financial professional before working with them.

Verify registrations – Make sure your advisor is properly licensed and registered with appropriate regulators.

Look for red flags – Multiple job changes, customer complaints, or regulatory violations should make you very cautious.

Get references – Ask for references from long-term clients and actually call them.

Understand What You’re Buying

Never invest in anything you don’t understand. If your advisor can’t explain an investment in simple terms, either they don’t understand it themselves, or they’re trying to hide something from you.

Ask these questions about every investment:
– How does this make money?
– What are the risks?
– What are all the fees and costs?
– How liquid is this investment?
– Why is this better than simpler alternatives?

Diversify Your Risks

Don’t put all your eggs in one basket:
– Diversify across asset classes – Stocks, bonds, real estate, etc.
– Diversify across sectors – Don’t concentrate in one industry
– Diversify across advisors – Consider working with multiple firms
– Diversify geographically – Don’t concentrate in one region or country

Watch for High-Pressure Sales Tactics

Legitimate investments don’t come with artificial deadlines. Be suspicious of:
– “Limited time” offers
– Pressure to invest immediately
– Claims about “exclusive” opportunities
– Reluctance to provide written information
– Discouraging you from getting second opinions

Monitor Your Accounts Regularly

Review statements carefully – Don’t just file them away. Actually read them and question anything you don’t understand.

Track your performance – Compare your returns to appropriate benchmarks.

Watch for unauthorized activity – Make sure all trades were authorized by you.

Question excessive fees – High fees can destroy your returns over time.

Be Skeptical of “Guaranteed” Returns

No legitimate investment can guarantee specific returns. The higher the promised return, the higher the risk should be. Be especially wary of:
– Promises of high returns with no risk
– “Guaranteed” investment programs
– Claims about secret strategies or insider information
– Investments that consistently outperform the market

Protect Your Personal Information

Don’t give out financial information to unsolicited callers or emailers.

Use secure communication methods when discussing investments.

Be careful with social media – Scammers use social media to research potential victims.

Shred financial documents before throwing them away.

Get Second Opinions

For any significant investment decision:
– Consult with another qualified professional
– Talk to trusted friends or family members
– Take time to research and think about the decision
– Don’t let anyone pressure you into quick decisions

Know the Warning Signs of Fraud

Ponzi scheme red flags:
– Consistent returns regardless of market conditions
– Difficulty getting your money out
– Vague explanations about investment strategies
– Pressure to reinvest returns rather than taking them out

Pyramid scheme red flags:
– Focus on recruiting others rather than selling products
– Income based on bringing in new investors
– Complex compensation structures with multiple levels
– Emphasis on getting rich quick

Understand Your Rights and Protections

SIPC insurance – Protects you if your brokerage firm fails (up to $500,000).

FINRA arbitration – Your main recourse for broker misconduct.

Regulatory oversight – Know which regulators oversee your investments.

Fiduciary duties – Understand when advisors have legal obligations to put your interests first.

What to Do If You Suspect Problems

Document everything – Save all communications, statements, and records.

Stop the bleeding – Don’t send more money or make additional investments.

Get professional advice – Consult with an experienced securities attorney.

Report suspected fraud – File complaints with appropriate regulators.

Act quickly – Time limits can affect your ability to recover losses.

Special Considerations for Seniors

Older investors are often targeted by scammers. Additional precautions include:
– Involving trusted family members in financial decisions
– Being extra skeptical of unsolicited investment offers
– Understanding that cognitive changes can affect decision-making
– Using advisors with specific training in working with seniors

Technology and Fraud Prevention

Be careful with online investments – Verify that websites and platforms are legitimate.

Use strong passwords and two-factor authentication for financial accounts.

Be skeptical of investment advice from social media or online forums.

Watch for phishing attempts that try to steal your login information.

The Role of Professional Advisors

Working with reputable, qualified advisors can provide protection:
– Fee-based advisors have fewer conflicts of interest than commission-based salespeople
– Fiduciary advisors have legal obligations to put your interests first
– Experienced advisors are more likely to spot potential problems
– Well-regulated advisors are subject to oversight and professional standards

Building a Support Network

Don’t make investment decisions in isolation:
– Maintain relationships with trusted advisors
– Stay connected with knowledgeable friends and family
– Join investment clubs or educational groups
– Attend investor education seminars

The Bottom Line

Investment fraud prevention requires vigilance, education, and common sense. The strategies I’ve outlined aren’t foolproof, but they’ll protect you from most scams and unsuitable recommendations.

Remember: scammers are getting more sophisticated, but the basic principles of fraud prevention remain the same. Do your research, ask tough questions, and trust your instincts.

If you do become a victim despite your best efforts, don’t be embarrassed. Get professional help immediately from an experienced securities attorney like Robert Pearce who can help you explore your options for recovery.

Your financial future is too important to leave to chance. Take the time to protect yourself, because prevention is always better than trying to recover from fraud after the fact.

This Blog was brought to you by the Carabin Shaw Law Firm, Principal Office in San Antonio

Defective Seat belts: A Hidden Danger on Our Roads

Unbeknownst to many drivers, a significant number of cars on our roads today are equipped with defective seat belts. Personal injury attorneys who specialize in this area have encountered numerous cases involving faulty seat belts, and unfortunately, this problem shows no signs of diminishing. Astonishingly, some major auto manufacturers are aware of these defects, yet they continue to install these subpar seatbelts primarily for cost-saving purposes. The safer belts, free from known defects, are considered more expensive, which directly impacts the manufacturers’ bottom line.

Consumer advocacy groups are rightfully outraged by the prioritization of profits over saving lives, although car companies vehemently deny such claims. As consumers, we have minimal awareness that our seatbelts may be defective. When we fasten our seatbelts, we hear the distinct ‘click’ sound as the buckle engages with the latch, and the belt itself appears secure. It may even function properly under normal driving conditions. However, the true danger only reveals itself during sudden braking or when the car abruptly comes to a stop, often due to a collision. It is at this critical moment that the defective seatbelt demonstrates its true colors. The hidden danger lies in the fact that we remain unaware of a faulty seatbelt until it’s too late. More on this site

That being said, there are some relatively crude tests one can perform to determine if a seatbelt might be defective, although these tests are not foolproof and only serve as indicators. To be considered safe, a seat belt’s buckle and clip must withstand a specific amount of applied pressure, typically 5 pounds (equivalent to the weight of a newborn baby). Try pulling the belt sharply with a force exceeding 5 pounds. If the buckle detaches from the clip, it is defective and should be replaced. More information here

Inertial seat belts are designed to protect the body from what is known as the “second force.” This force occurs after the initial impact when the car comes to a sudden stop. Inertial forces, governed by gravity, continue to propel the body forward. It is this second force that often causes more injuries than the impact itself. The purpose of inertial latching on a safety belt is to minimize the movement resulting from this second force, thereby locking the belt in place. However, a defective belt may fail to lock correctly, leading to inertial unlatching. To test if the belt locks up properly, once again, tug sharply on the belt with a force exceeding 5 pounds. If it fails to lock, it can be deemed faulty and should be replaced.

Another aspect to consider is the possibility of physical damage to the belt. Inspect for visible signs of wear or damage. In some cases, wear may be apparent, indicating the need for immediate replacement. In other instances, the webbing may seem strong to the naked eye, but there could be underlying manufacturing defects compromising its structural integrity. Since their introduction in the United States in 1964, seatbelts have undoubtedly saved countless lives, and we rely on them to protect us in the event of sudden stops or collisions. If you suspect that you or a family member has been a victim of a defective seatbelt, it is crucial to contact an experienced personal injury attorney well-versed in handling such cases. They can make a significant difference in ensuring you receive the compensation you rightfully deserve, potentially making the distinction between walking away empty-handed or securing a successful claim.

This Blog was brought to you by the Carabin Shaw Law Firm, Principal Office in San Antonio

Personal Injury Law – Auto Accidents

Receiving a traffic ticket is not the only thing we need to worry about when we get behind the wheel. Whether we like to admit it or not, car accidents happen. Each year, there are approximately 6 million car accidents in the United States. Of those, 3 million people are injured.

Contact our Law Office today if you were injured in a car accident.

Car Crash Cases

Getting into a car accident creates enough unneeded stress on you. Arguing with insurance companies, trying to go on with your life, and dealing with the costs of repairing your car are tough. As a car accident victim, you should not have to deal with costly medical bills, the inability to pay for them, and personal injuries that prevent you from going to work.

Hiring a personal injury attorney will allow you to fight back and use the law to protect you.

With years of experience handling all sorts of traffic-related matters, our Law Firm brings tremendous knowledge and skill to the table whenever handling a car crash case.

How Do I Win My Car Accident Case?
Whenever you sue a motorist who injured you in a car accident, you need to prove that he acted negligently and was at fault. Remember, if you were not physically injured in the accident, you will have difficulty winning a personal injury lawsuit.

To win your car accident case, you need to prove that the party you are suing owed you a duty that he breached and, in doing so, caused you to suffer personal injuries (i.e., damages).

Proving Negligence

As a general rule, we all owe one another a duty of reasonable care under the circumstances. This means that if someone acts unreasonably toward you, that person breached his duty. For example, if he was swerving all over the road and not paying attention, he was driving unreasonably. As such, he breached the duty of care he owed you and other fellow drivers. If his actions caused an accident that resulted in you suffering a physical injury, you could sue him for negligence.

Recovering Your Loses
If your injury lawyer can convince a jury that the driver was negligent, you can recover money to compensate you for your:

medical bills
pain and suffering
lost wages
physical disfigurement
emotional trauma

Many think initiating a car accident lawsuit takes too long and is not worth the time or effort. However, this is simply untrue.

Cost of Hiring a Personal Injury Lawyer

It costs nothing to reach out to a personal injury attorney, and most (if not all) attorneys will not see a dime unless you do. Be smart and contact an experienced car crash attorney today.

Who Should You Contact?
Contact our Law Firm today if you or a loved one were injured in a car accident. Our firm will fight to ensure you get a fair shake in the courtroom and at the bargaining table. E-mail or call us today toll-free.