Tag: Cold Calling

FINRA Issues Article on Common Investor Problems

The Financial Industry Regulatory Authority (FINRA) issued a new article called Common Investor Problems and How to Avoid Them. The article discusses the four most reported investment problems and provides steps investors can take to avoid them.

Listed below are summaries of the common problems, how to detect them, and how to avoid them.

  1. Misrepresentation: This is when the advisor makes untrue statements or omits information in regards to the investment. The problem is usually detected when the investor reviews prospectuses, account statements, confirmations and other documents or suffers a decline in their investment account. In order to avoid this problem, investors should understand the products they are investing in, ask the advisor to send them information on the investment and keep notes of their conversations with their advisor.
    2. Cold-Calling: This is when investors receive unwanted phone calls from advisors and the advisors use high-pressure sales tactics to solicit the investor to purchasing a product. Usually a cold-call consists of an advisor calling frequently, pressuring the investor to move quickly, asking the investor to sell a well-known security for an obscure product and/or using a three-call system to entice a buy. Investors can avoid cold-calls by asking the cold-call firm to add them to their “do-not-call” list, being wary of sales pitches, conducting a FINRA BrokerCheck on the advisor and firm and/or visiting the firm prior to sending money for the investment.
    3. Unsuitability: A suitability problem occurs when an advisor purchases an investment that is inconsistent with the investor’s objectives and investing profile. The problem can be detected by the investor reviewing their account and researching the investment or another professional pointing out the suitability issue. To avoid a suitability problem, an investor should read and understand all account documents, understand the investment, provide the firm with accurate data regarding income and risk tolerance and keep records of conversations with the advisor.
    4. Unauthorized Trading: This problem occurs when an advisor makes a purchase in an investor’s account without the investor’s knowledge or authorization. The problem is usually detected when the investor reviews his or her confirmations and statements and discovers an unknown product. To avoid unauthorized trading investors should review and retain all documents received from their brokerage firm, document all conversations with advisors and always repeat clear instructions to their advisor.

FINRA also suggests that investors should research investments prior to purchase and act quickly if you believe you have been wronged.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.