Watch out for Bad Brokers

Everyone wants to make a quick buck and get in on the deal of the century.  Human nature being what it is, if a registered representative providing investment advice tells you that he or she will invest your money in high yield publicly traded securities providing steady and dependable returns.

The Securities and Exchange commission (SEC) is charged with the investigation of registered representatives gone bad.  In a recent case the SEC charged a broker with defrauding approximately 30 investors by failing to invest their money as agreed and instead using the monies to pay his own debts.  

As noted by Kelly L. Gibson, associate director of the SEC’s Philadelphia Regional office, “Those returns were a fiction.  Smith was misappropriating investors’ money and lying to cover his tracks. This matter highlights the need for retail investors – and retirees and elderly individuals in particular – to remain skeptical of investments that sound too good to be true.”

Many mature investors have been through 2 if not 3 significant market corrections where significant portions of their wealth were wiped out as markets collapsed.  Waiting for recovery involves patience that many investors, particularly those approaching retirement who were unprepared for and could not afford a significant correction do not have.  At those times unscrupulous brokers and financial advisors prey on those investors, telling them they can get them the returns they need to get back where they thought they should be.

If it looks too good to be true it probably is.    

People who suffer significant losses they did not account for, often as a result of unsuitable investments for their goals and time of life often look to switch brokers and advisors who they rode to the bottom.  They end up thinking and hoping that they can get their portfolio restored with one good investment. At times like that, an unscrupulous broker or advisor, with a good sales pitch can get the attention and money.

Daniel O’Brien is an attorney at Halling and Cayo, a full service law firm in Milwaukee, WI and part of its Securities Litigation team.

He focuses his practice on insurance defense, commercial and coverage litigation, insurance fraud investigations and Plaintiff’s personal injury work.

Contact him at (414) 271-3400 or via e-mail at to see if he can help recover funds.