“You Mean I Could Invest in a Ponzi Scheme Through a Well-Known Brokerage Firm?”

There are things you need to know about how your broker operates that your broker wouldn’t tell you even if you waterboarded him.

I get the question all the time. I’ve criss-crossed the country twice already this year speaking about investment fraud and sound due diligence methods. It’s the rare occasion when someone doesn’t come up after the speech and ask something like this:  ”My money is at ______ (fill in the blank with the name of a well-known brokerage firm), so I don’t have anything to worry about, right?” They are always disappointed with the answer: “Not necessarily.” Every year, hundreds-perhaps thousands-of investors lose tens-perhaps hundreds-of millions of dollars in Ponzi schemes sold by brokers for the same well-known firms whose commercials play during golf tournaments and NFL games. There is really only one difference between the firms you’ve heard of and the ones you haven’t: the marketing budget. A recent story from InvestmentNews makes the point: (more…)

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