Archive for Financial

Oakmere Road: 5 Signs That Your Investment Adviser Is Scamming You

When it comes to investing, there are precious few certainties, other than the fact that nobody works for your financial best interest as completely as you do.

 

That fact became obvious to the clients of the Warrenville, Ill., company Capital Management Associates recently when the SEC brought a suit against the father-and-son team that run it for “cherry picking” trades.

 

We’ll get back to that story in a moment. But it’s important for everyone to know that even the ethical players in the financial industry earn their living based on the fees they get directly from you or via the providers of products they recommend to help you achieve your goals.

 

In addition, because financial management is somewhat complicated and the future is never guaranteed, it’s an industry rife with opportunities for fraud and theft. That’s especially a risk when people turn over complete control of their hard-earned cash to an “expert” who promises to manage it for them.

 

If you suspect that your financial adviser may be scamming you, here are five signs that can help you uncover it.

 

Sign No. 1: An Adviser Won’t Provide Real-Time Trading Information.

 

In the case against Capital Management Associates, the SEC alleges that the duo ran trades without specifying whether they were for clients’ accounts or for the owners’ accounts. Then, once the profitability or loss of the trade was assured, the company would backdate that information, assigning the profitable trades for themselves and the losers to clients.

 

Losing money in an investment is not a crime, but cherry-picking among winning and losing trades after the fact is.

 

How could clients of Capital Management Associates have known that they were getting saddled with the bad trades? The short answer is: by staying in the loop.

 

Those who trust their adviser to trade on their behalf should, at the very least, insist on receiving a running total of all trades when they are made. If your financial adviser can’t or won’t do that for you, then chances are pretty good that you’re being scammed.

 

Sign No. 2: An Adviser’s Returns Are Too Good to Be True.

 

Bernie Madoff swindled investors out of billions of dollars in what has been called the largest Ponzi scheme ever uncovered. While Madoff, a former chairman of the Nasdaq stock exchange and securities representative on SEC industry panels, knew enough to hide from the regulators for decades, his returns were too consistent to be real.

 

Sponsored Links Any time an investment advisor is guaranteeing returns or assuring consistency, year in and year out, there’s a pretty good chance it’s a scam. And while there are a few legitimate annuities with investment accounts structured in a way to “guarantee” you won’t lose money, they’re generally just high-cost insurance plans where you’re paying dearly for those guarantees through the structure of the deal.

 

Sign No. 3: You’re Getting Hot Tips That You’re Told You Need to Act on Now.

 

Any legitimate investment worth owning will still be available tomorrow, after you’ve had the time to think about it (and research it independently). Any pushy advisor telling you things like, “You’ve got to act today to get in on the ground floor” or “You don’t have time to read the paperwork” is asking you to act without reviewing something, which is a common hallmark of a scam.

 

While there are real deadlines for things like IRA contributions, the money in those accounts can easily sit as cash until you’ve had time to review the details of the investment recommendation. And be aware that prices in the stock and bond markets do change regularly — often several times throughout a trading day. If your adviser brings you an investment to consider and you do take the time to review it before buying, don’t be surprised if the price winds up being a bit different than initially discussed.

 

Still, it’s better to wait and lose a little bit than to lose everything to an outright scam.

 

Sign No. 4: You’re Promised Investments That Will Be “No Cost to You.”

 

If you’re working with a financial adviser, that advisor is getting paid by you, either directly by checks you write or indirectly via commissions, spreads, or fees generated by the investments you make. Any adviser claiming otherwise is hiding something — likely an outlandishly high fee for placing an investment or insurance policy, which can often run north of 7 percent of the invested amount.

 

A competent advisor deserves to be paid for his or her time and expertise. But one that won’t tell you how much you’re paying for the service or how you’re paying for it is an adviser to walk away from.

 

 

Sign No. 5: Your Account Is Being Churned and Burned.

 

And speaking of fees, be wary of an adviser who regularly churns your account through multiple trades of similar types of annuities, mutual funds, or other investments. If your adviser is getting paid through a hidden commission from making the transaction, that activity is very likely lucrative for the adviser … but not so much for you.

Not all investments work out, of course, but a common definition of insanity is doing the same thing over and over again while expecting different results.

 

If your advisor is trying to convince you that the investment you are in is so much worse than a fairly similar one you should be in, that’s a sign that neither investment is likely right for you.

Investor Education Gateway by International Financial Securities Regulatory Commission

Welcome to the IOSCO Investor Education Gateway! This is the place to find information about many IOSCO members’ on-line investor education activities, as well as IOSCO publications and presentations regarding investor education.

 

Investor Education has been and continues to be a significant part of multiple IOSCO seminar training programs. Additionally, and upon requests made by IOSCO members, dedicated Investor Education training has been organized and presented by IOSCO staff.

 

IOSCO has a major commitment to improving and promoting investor education. Just some of the priorities on the horizon for the IOSCO Education and Training team include:

 

- Conducting Investor Education Workshops;

- Expanding the Investor Education Gateway;

- Making investor education resources available for all IOSCO members;

- Continuing IOSCO research regarding all aspects of investor education, and offering assistance to IOSCO members with respect to their own investor education initiatives;

- Providing forums and other platforms for IOSCO members to share “Best Practices” and “Good Ideas”;

- Analyze what does the current research show with respect to investor education?;

- Focus on what works and what does not work…and what is the proof if something does work?”

 

The International Financial Securities Regulatory Commission was established to promote investor confidence in the securities and capital markets by providing more structure and government oversight.

International Financial Securities Regulatory Commission: Reporting by undertakings with listed securities

The Transparency Directive prescribes for Member States to set out rules for issuers with securities admitted to trading on an EU regulated market so that they disclose certain key information about their operation. With such a transparency, European issuers build sustained investor confidence and contribute to the capital market union.

 

Legal framework

Basic acts

- Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (Directive 2004/104/EC) – consolidated version including subsequent amendments

 

Other acts

- Equivalence of third country accounting standards: Read more (Later)

 

Other acts

- Commission Delegated Regulation (EU) 2015/761 of 17 December 2014 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to certain regulatory technical standards on major holdings (Regulation 2015/761/EU)

- Commission Recommendation of 11 October 2007 on the electronic network of officially appointed mechanisms for the central storage of regulated information referred to in Directive 2004/109/EC of the European Parliament and of the Council (notified under document number C(2007) 4607) (Recommendation 2007/657/EC)

- Commission Directive 2007/14/EC of 8 March 2007 laying down detailed rules for the implementation of certain provisions of Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (Directive 2007/14/EC) – consolidated version including subsequent amendments

 

The International Financial Securities Regulatory Commission was established to promote investor confidence in the securities and capital markets by providing more structure and government oversight.

 

International Financial Securities Regulatory Commission: Regulatory Filing & Reporting

Regulatory Filings

 

FINRA employs advanced technology to monitor the markets and regulated firms. Our systems help firms comply with applicable regulations.

 

Report Center

 

The Report Center provides firms with secure access to data and reports that help firms detect potential compliance problems early.

 

Market Transparency

 

FINRA operates systems that help member firms comply with reporting requirements and facilitate transparency in the applicable markets.

 

The International Financial Securities Regulatory Commission was established to promote investor confidence in the securities and capital markets by providing more structure and government oversight.