Stock Fraud Nails Many

Stock fraud these days seems to be almost as common as product recalls. People need to be wary about investing in stock without doing due diligence.

“Generally speaking, there are two kinds of people who want to venture into the world of investing. Those who have an optimistic point of view on investing (if all goes well) but remain skeptical in light of recent fraud cases, and those who are skeptical first and try to hang onto their sense of optimism that not everyone is out to scam you,” said Michael G. Smith, an Arkansas injury lawyer, practicing personal injury law and dealing with stock fraud cases in Little Rock Arkansas.

The most successful investors seem to have a certain internal radar about them that can spot a dud at fifty paces and the Bernie Madoffs of the world don’t get past their front door. “Having said that, it’s not easy to spot a fake, particularly when the fraudster is charming, personable, has a good reputation and an ‘image’ that projects confidence and trustworthiness. It’s those with the glib gab that get the furthest and make the biggest bucks in scamming people,” commented Smith.

Is it really possible to pull the wool over people’s eyes, take them for mega bucks and keep doing it for years? Yes, it is possible, and it’s possible because people have not done true due diligence in checking out the investment opportunity. They have relied instead on that illusive word of mouth from others and a person’s reputation. They have not checked into any details in any depth, and this is how people get ripped off.

“While people don’t like to question those that appear to be in the know, be successful and may even be a friend, it’s in their own best financial interests to check, check, check and check again,” added Smith, who has handled some interesting stock fraud cases in his years of practice. “You need to protect your ‘own’ interests first and if that means the person who is offering you a ‘great deal’ stops talking to you, you may just be better off,” he said.

Relying on mere trust without checking is precisely how Ponzi schemes get going and stay flourishing until the roof falls in one day. “Put another way, the person who unwittingly gets back his principal investment (from newer clients) as their ‘return on their investment’ just sets the person up to be a sitting duck who unintentionally may supply other victims to the scammer,” outlined Smith.

“Here’s one thing that you might want to watch out for if you’re planning on dealing with an independent investment advisor. First off find out if the advisor’s independent accounting firm is an obscure, ‘who in the heck knows who they are’ kind of firm,” recommended Smith.

If the investment advisor someone is working with keeps custody of client assets (money), that means they “must” have independent audits and unannounced audits by the SEC. If the advisor isn’t keeping the assets, but a group does, the client has statements to verify what is going on. In the Madoff case, the accounting firm was a “who in the heck are they” kind of firm. Red flag number one.
There are other areas to check as well, including the answers to the advisor’s ADV on the SEC site.

Analyze them carefully, because quite often there are clues sprinkled in the answers that will tip someone off that all is not as it appears to be. “When in doubt, speak to an attorney who handles cases like this and have them check the information out. It could save you a whole lot of economic grief,” stated Smith.

Learn more by visiting http://www.Arkansaslawhelp.com

Michael G. Smith is an Arkansas injury lawyer and Arkansas accident lawyer, practicing personal injury law in Arkansas.