BrokerCheck, Churning, FINRA, Investment Responsibility, Investment Strategy, Securities Account Statements, Stockbroker, Suitability, Unauthorized Trading
It happens all the time. People socialize with those they are familiar with, those who speak the same language, those who go to the same church, mosque or temple, and those whose family members are from the same country. This familiarity often times creates business relationships that ordinarily would not exist. And there is nothing wrong with creating business relationships based upon these ties.
But be aware of the instance where you may be taken advantage of by “your own”. All too often one will give another within the community a trust that is not earned, but given with the thought: “this person would never take advantage of me.” When you hear phrases such as “If [fill in name of another community member] trusts me, you can trust me” or “I’ve known your [father/mother/uncle] for years, don’t worry, I’ll take care of you” take a moment. Stop. Particularly if this person is handling your investments and finances.
There are many phrases that refer to the dangers of working with those you socialize with, and while many are accurate, they are simply excuses as to what you must do at all times: stand up for yourself. Trust is a two-way street that must be earned. You should be comfortable enough with the relationship with your broker to ask a question, be satisfied with the answer, and hold the person accountable for his actions regardless of whether the person is an old family friend or someone you see weekly at church. If the comfort does not exist, bad news…there is no trust.
When this trust extends to your broker, you have a responsibility to yourself. Before investing your hard earned money, do some due diligence on the community member broker other than asking if “Uncle Eddie” thinks the broker is a nice guy. Stockbrokers are registered in a national registry that can be accessed through the site http://brokercheck.finra.org. This site will provide you access to important information such as the broker’s employer, the broker’s work history and any investor or regulatory complaints filed against the broker. You’ll get a better understanding of who the broker is other then when you’re not seeing him once a week at church or in a social setting.
Your broker has certain responsibilities as to what securities he recommends, the requirement to speak to you before every buy and sell, and to make sure the account is not being traded just for the purpose of generating commissions. However, make no mistake, it is your money the broker is investing and thus it is your responsibility to make sure you are comfortable with your broker and the manner in which he is handling your investments. Whether you are in the beginning stages of investing or some point thereafter, take the time to know what your broker is recommending, follow the investment portfolio on a monthly basis, and don’t be shy to push back where necessary. Simply relying upon the broker blindly because he is a member of a certain community is a surefire way to lose what you have worked hard to accumulate.
The Law Offices of Barry M. Bordetsky represents customers and industry representatives in FINRA arbitrations as well as before state and federal courts. If you have questions regarding the process, please contact Barry Bordetsky by telephone at (800) 998-7705 or email firstname.lastname@example.org. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.