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Big Names No Protection

ABC News is reporting that Wachovia Bank processed over $140 million in transactions for corporate clients who were engaged in telemarketing fraud. 
Wachovia is said to have collected millions of dollars in fees, and despite numerous warnings from inside and outside of the bank, apparently never looked into the sources of the fraudulent transactions.
Financial criminals know that they [...]

ABC News is reporting that Wachovia Bank processed over $140 million in transactions for corporate clients who were engaged in telemarketing fraud. 

Wachovia is said to have collected millions of dollars in fees, and despite numerous warnings from inside and outside of the bank, apparently never looked into the sources of the fraudulent transactions.

Financial criminals know that they are much more likely to attract victims if they can throw around the names of well-known big businesses.  Maintaining accounts at large financial institutions is the most basic way in which they establish an aura of legitimacy.  Do not be impressed, therefore, at where an investment promoter banks, or who he claims to have retained as his accountant, auditor, or attorney.

Finally, do not be impressed with the name of your own brokerage firm or with what the Financial Industry Regulatory Authority (FINRA) tells you about your broker.  I recently ran a BrokerSnapshot report on a broker with one of the largest brokerage firms in the world.  FINRA reports that she has no customer complaints — she has ten complaints in the Investor’s Watchdog database.  Each of those ten customers was no doubt impressed by the name of her company.  Some probably checked her out through FINRA and were comforted to learn (falsely) that her record was clean.

Names are no indication of trustworthiness.  As the Wachovia story illustrates, the involvement of a big name company only means that the big name company is making big money on the deal.  They would never look after your interests ahead of their own.  You can protect yourself with private investor protection services or choose not to do so; but you can no longer be surprised if a big name turns out to be complicit in a scheme that costs you your life savings. 

 

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