How to Prevent Investment Fraud

A little homework before choosing a stockbroker and investments - and a little caution when getting advice - will help protect your portfolio.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Reading Glasses
• File Cabinets
• Reading Chairs
• Reading Lamps
• Financial Periodical Subscriptions
• File Folders
• Investment Software

1. Select a broker or investment advisor who understands your financial objectives. Interview several to compare experience, education and professional background.
2. Call the National Association of Securities Dealers at [phone] to find out about the disciplinary history of the broker.
3. Understand how the broker is compensated and what fees you will pay to purchase and sell securities and to maintain the account.
4. Get written financial information such as a prospectus or an annual report before making an investment in stocks, bonds or mutual funds.
5. Read these documents carefully; consider all the risk factors.
6. Be wary of promises of quick profits, offers to share inside information, and pressure to invest before you have an opportunity to investigate.
7. Talk with the firm's manager if you have a problem with your broker or your account.
8. Contact the U.S. Securities and Exchange Commission, the National Association of Securities Dealers, or your state securities regulator if you cannot resolve the problem.