Various Security Frauds that You Can Avoid – Few Types, Tips

The best conventional way to avoid a fraud case is by educating and understanding the frauds in investment security. There is a list of companies in stock markets which despite having long history of fraud cases, investors approach them every day.

If you are an investor, most of the time you will be dependent on a financial advisor, your personal secretary or on other professional expertise. If you are aware of the recent situation, what you can do is understand the common attributes of a fraud to avoid occurrence of such a situation altogether.

It is important for you to remember that once your money is gone, there is no coming back. Galvin Legal, PLLC is one such attorney who offers you free consultation and other assistance. They look after the case of security frauds and guide you with the next possible steps.

Before that, let’s read some characteristics of a fraud so that you can deal with that situation well before time. Such as –

Broker Misconduct

You will find many ethical and reliable brokers at your service. However, there will also be others who will break ethical and other legal commitments they have towards customer. This might expose you to huge loss and might put you in debt. For example, misleading illustration, margin trading and also unsuitable investments.

Equity Indexed Annuities

It is extremely important from the broker’s side to put up all the expected claims related to investment. Besides, this should be discussed upfront before finalizing the deal. Unfortunately, it is seen that most of the investors get equity indexed annuities. The purpose of buying this is to gain assurance of not losing their money. However, if a broker misleads you, you can go for a legal claim later on.

Hedge Fund Abuses

Hedge Funds are something that an investor believes that they can’t lose their money. However, there is always a risk, if the person working as a manager misleads you to invest in it.

Investment Advisor Misconduct

If you are an investment advisor then chances of error are pretty less. However, there are many occasions, where investors might fail to work up to the mark. Some of the examples are failing to test suitability, making unauthorized changes in a client’s portfolio or churning.


If any broker or financial advisor is suggesting you an investment plan, it is essential on their part to put all the necessary facts upfront. This way, whatever is your decision, it will totally be based on facts you that you know. Unethical investors might avoid putting up every necessary point, which is enough to qualify them as a fraud and put up necessary legal action against them.

Put and Call Options

When you are investing in any firm for the first time, you might practice the use of various terms. It is the responsibility of the broker to explain you all the relevant facts so that you can make an informed decision.