Investor fraud protection: Who's got your back?
By: Adam Schlagman, Managing Editor
The smart investor is always on guard against potential fraud. Thorough due diligence is the best way to protect yourself against falling prey to an unscrupulous or deceptive investment opportunity, but you don’t have to go it alone.
If you run across something that looks like a scam or seems too good to be true, or if something else about it just doesn’t look right, consider the following resources, or just browse them to find the latest information available on fraud.
The North American Securities Administrators Association - A voluntary association whose membership works to be the “voice of state securities agencies responsible for efficient capital formation and grass-roots investor protection. Its fundamental mission is to protect consumers who purchase securities or investment advice. Its jurisdiction extends to a wide variety of issuers and intermediaries who offer and sell securities to the public.
Here you’ll find: investor education, fraud alerts and tips, legislative, regulatory and legal news, publications, speeches and reports – all geared toward helping educate and inform investors.
Securities Investor Protection Corporation – The SIPC oversees the liquidation of member broker-dealers that close when the broker-dealer is bankrupt or in financial trouble, and customer assets are missing. “While a number of federal and state securities agencies and self-regulatory organizations deal with cases of investment fraud, SIPC’s focus is both different and narrow: restoring customer cash and securities left in the hands of bankrupt or otherwise financially troubled brokerage firms.”
Here you’ll find: cases and claims, education, FAQ’s about customer protections and brokerage firms, forms to file, news, publications and special reports about what SIPC does and how investors can benefit.
StopFraud.gov - The Financial Fraud Enforcement Task Force was created in November 2009 “to hold accountable those who helped bring about the last financial crisis as well as those who would attempt to take advantage of the efforts at economic recovery . . . With more than 20 federal agencies, 94 US Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to co
Here you’ll find: education on different types of fraud, how to protect yourself against fraud, ways to report fraudulent activity, resources for victims of fraud, publications and easy-to-understand video presentations (here) on topics investors should know, pertaining to combating investment fraud.
The Federal Bureau of Investigation – The FBI investigates a gamut of crimes including terrorism, counterintelligence, public corruption, civil rights, organized crimes, violent crimes and major theft. The array of “white collar” crimes (or, as the FBI calls it, “lying, cheating and stealing) they investigate includes:
- Bankruptcy Fraud
- Corporate Fraud
- Financial Institution Fraud & Failures
- Health Care Fraud
- Insurance Fraud
- Mass Marketing Fraud
- Money Laundering
- Mortgage Fraud
- Piracy/Intellectual Property Theft
- Securities and Commodities Fraud
- More White-Collar Frauds
Here you’ll find: reporting platforms for fraud issues, education on how to spot fraud in an investment, common fraud schemes, a “most wanted” list, and definitions for terms investors should know. Read more here.
FINRA – The Financial Industry Regulatory Authority is “an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly” by enforcing high ethical standards, bringing the necessary resources and expertise to regulation, and enhancing investor safeguards and market integrity. This includes deterring misconduct by enforcing the rules, disciplining rule breakers, detecting and preventing wrongdoing in U.S. markets, resolving securities disputes and educating and informing investors.
Here you’ll find: The FINRA Investor Education Foundation, BrokerCheck – so you can search for information on a specific broker; the Market Data Center – for investment and market research; a Fund Analyzer – with information on thousands of mutual funds and ETFs, among others; and a Scam Meter – for investors to explore if their potential investment may be fraudulent.
And to answer the question in the headline, “SEC and FINRA Got Your Back” – read more here.