Be wary of financial advisor fraud if you have faith in them. These include excessive trading activity (or account churning), delayed response times, and account churning. Bernie Madoff’s multibillion-dollar fraud is an example of how to spot fraudulent advisors. A financial advisor who has proprietary investments is another sign to look out for. This does not necessarily indicate that the advisor is engaged in fraud. However, it could indicate that the firm is making money for you. Furthermore, it is common for investment statements to be doctored to disguise fraudulent activities. Lastly, delayed or non-existent responses to your questions are a major red flag.

FINRA attorney

If you suspect that a financial advisor is involved in financial advisor fraud, the first step is to investigate your investment advisor’s past history. While the cockroach theory applies to financial advisers, there are some common red flags to look for. These include poor recommendations, sales abuse practices and excessive trading. While these are not necessarily indicative of fraud, they should be taken into account when determining whether a particular advisor is a suspect.

Financial advisor fraud is now restricted in their ability to take action. Your case will determine the next steps. A good FINRA attorney can guide you through the entire process from beginning to end.

You should also consider filing a complaint to the securities regulator as a final step in protecting yourself against fraud. Securities regulators include state-level offices of financial regulation and the SEC. These agencies investigate complaints against financial advisors. These agencies are not the main focus of securities regulators. Individual investors may need to be redressed for years. Although these agencies can be very helpful, it can also prove to be too late for victims.

FINRA’s study found that financial advisers who lack ethics are more likely to commit financial advisor scams. The study also identified red flags associated with misconduct. The most common behavior was unauthorized trading, improper selling practices, and excessive trades. The Meridian-IQ database data was used by the researchers to analyze the relationship between advisors & clients. It also shows that the highest percentage of fraudulent cases happened with retail investors.

While the criminal penalties for financial advisors are not lenient, they are still very serious. Many are guilty of felony offenses and could face heavy fines. A federal judge’s verdict can lead to a sentence of up to two years in jail and a restraining order. These penalties can be combined with a stiff penalty.