Beware of Binary Options Scams! These companies usually make false statements and promises, and often deceive unsuspecting traders. They lure victims by promising tens of thousands of dollars in a short time. They also show them different deposit amounts, claiming that the higher the deposit, the faster the money will accumulate.
If you’ve recently invested in stocks and are concerned that your broker is conducting illegal activities, there are a few things you can do to protect yourself. First, you should verify that the broker is registered with a legitimate international financial regulator. To do this, visit the website of the brokerage firm.
Another red flag is when your broker is unable to honor withdrawals. You may have made a sizable investment and are forced to pay excessive commissions, fees, or taxes before you can withdraw it. Some brokers will also freeze their trading platforms, which prevents customers from canceling their orders. This way, the unscrupulous brokers can fill your orders outside the market. In addition, scam brokers can impose unreasonable withdrawal requirements on customers. For example, they may demand too many forms of identification to withdraw your funds. Another red flag is when they place unreasonably long hold times before releasing your funds.
Traders should pay close attention to a broker’s reputation, and avoid the one with excessive complaints. While there are always a few disgruntled customers, excessive complaints are a red flag. Traders should look for any pattern of complaints, and be careful to note the reasons for them. One way to find out if a broker is reputable is by researching their website. Firms with thorough, detailed websites have more credibility than those with vague information. It’s also helpful to look for specific information that’s segmented by product type.
Conversion of funds
Often called broker theft, this type of misconduct is committed by stockbrokers who illegally transfer money from one customer to another. It violates FINRA rules that prohibit the improper use of customer funds. The broker’s firm can be liable for the conversion of funds. Investors should investigate any suspicions of misrepresentation and inquire about account transfers. If they discover that funds were converted, they should contact a securities fraud attorney.
In other cases, brokers may convert funds by making fictitious promissory notes. They may also be directly or indirectly controlling or benefiting from private investments. Ponzi schemes are another common example of conversion. These schemes involve the distribution of funds from new investors to previous investors. Investors are often told that the distributions are investment returns, but this isn’t true.
Unfair trading practices
Scam stock brokers often use impersonation and deception to get your money. In one case, an unscrupulous individual impersonated an investment professional with a spotless regulatory history to scam potential clients. The impersonator created a fake FINRA BrokerCheck report and emailed it to potential clients. This false report included the name and CRD number of the registered investment professional as well as a fake broker-dealer’s name. The fake report also included other documents such as a photo of a driver’s license.
Impersonation and fraudulent activities are against securities trading rules. These practices include selling nonexistent investments to investors without their permission. This is a breach of fiduciary duty, and it can result in a lawsuit.
Failure to execute trades & orders
The failure to execute trades and orders by scam stock brokers can be caused by a variety of reasons. In some instances, a broker may choose to disregard a client’s order because of financial incentives or greed. Others may choose not to execute orders in order to appear heroic. Unfortunately, when a broker ignores an order, it means a client’s investment may suffer.
If the broker is refusing to execute your order, it is important to seek legal advice right away. It may be that the broker is understaffed or doesn’t have enough staff in the order room. If this is the case, you should be able to get a free consultation from a broker-fraud attorney.