Fraud and scam awarenessJanuary 22, 2009
Mark on the markets Mark Patterson
Fraud and scam awareness
It seems that in the last couple of months, there has been more fraudulent activity that has surfaced among people and organizations that are supposed to manage and grow your money, not steal it. Some things I would like to point out in this writing are things that you can look for make as certain as possible that the person or organization handling your money is legitimate and trustworthy.
The first check would be to go to the regulatory website and check out your broker or advisor. For securities or mutual funds, go to www.Finra.org.
For Futures and commodities, www.NFA.Futures.org. Each of these sites have areas that you can look at your broker or advisors history, and if there are any issues with their past.
The states regulate the insurance industry within that state. Annuities and life and health, as well as some registered investment advisors can be checked out through the state web sites.
Investment advisors and Commodity trading advisors must give you disclosure documents that address past history, performance, legal issues if any, business background and more.
Many scams could not have been avoided just by an initial check. The Bernie Madoff alleged pozie scheme was able to succeed because Bernie controlled the Broker Dealer that printed the fraudulent statements.
Make sure your money is with a legitimate third party broker that you can check out on your own. The advisor or broker should never have access to your money except to trade or buy and sell positions. Any fees to the broker or advisor should be handled by the Broker dealer. Your money should not be commingled with other client funds, advisor or broker funds.
Check out the health of the Broker –dealer that your advisor or broker is affiliated with. Ask your broker or advisor how they are paid, and if there are any “soft money” payments or 12b1 fees attached to your mutual funds.
There is a big difference between fraud, ethics violations and lack of competence. They can however all cost you money in a time when so much of that money has been lost to the markets.
Do your homework and as one great president said, “trust but verify”.
Mark Patterson is a money manager with MHP Asset Management LLC, and can be reached at 447-1978, or Mark@MHP-Asset.com
MHP Asset Management, LLC
P.O. Box 460, Conway, NH 03818
Phone: 603-447-1979 Fax: 603-941-0904 |
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