Is Your Broker A Crook?

If your money is lost and your financial adviser is missing, here's what you can do to recoup your investment

The CFA has an enforcement division that monitors the professional conduct of individuals who carry the CFA designation. That division will also investigate complaints and impose disciplinary action against any wrongdoers, according to Stokes.

Forbes took part in a lawsuit against Lehman and subsequently recovered some of his money. Forbes, normally a very conservative investor, says that he didn’t always know which stocks Gruttadauria was buying though he knew Gruttadauria was investing in the high-technology arena. “Would I do it again? Absolutely not,” he says. “But we were in the midst of the dot-com revolution, and I took a gamble. I don’t like to lose $10. But I took a chance.”

The lesson for other investors, he suggests, is to “stick with the companies that made America great. And make sure you go with reputable companies — companies that have been around, that have longevity, and that you think will be here for years to come.”

Even savvy investors like forbes can sometimes get scammed. Follow this advice when choosing a financial adviser:
Always interview at least three prospects.

Get referrals from friends, family members, colleagues, or others you trust. Obtain referrals from the Financial Planning Association by calling 800-647-6340 or visiting ww
. The National Association of Personal Financial Advisors (; 800-366-2732) can give you the names of local fee-only planners in your area.

Ask each individual for Parts I and II of their ADV Form — also known as an Advisor Form. These documents disclose data about the person, such as education, professional certifications, work experience, and regulatory and disciplinary history.

Beware of individuals who constantly name-drop about high-profile people with whom they allegedly do business. Scam artists often try to gain your confidence and lure you into a false sense of security by offering testimonials or telling you about other well-known community members who’ve invested profitably with them.

Always obtain a prospectus or written information about the risks inherent in any investment you’re considering.

Get a clear understanding about how you can exit an investment that goes sour.

Get outside opinions. Seek input from a competent professional outside your group and check whether the individual and his or her company are registered with local and federal securities agencies.

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