Protect Yourself: Learn Early to Recognize Stock Fraud

When the economic recession began in 2008, many people were ecstatic that they hadn’t invested any money in the stock market. As 2013 rolled around and the DOW Industrial Average broke new records, however, many were kicking themselves for not investing when the market bottomed out. The simple fact is that investing in stocks is a good way to build up a nest egg if done correctly. What’s important to note, however, is that there are scams out there; and avoiding these stock scams is essential if a person hopes to avert financial ruin.

Protect Yourself Learn Early to Recognize Stock Fraud

Stock Scams in a Nutshell

There are various types of stock scams circulating, and con artists engaging in them target a variety of people. While they do sometimes go after amateur investors in public forums, the majority of these dishonest individuals go directly for senior citizens. The elderly population often has reserves of money saved up, and unfortunately, if they fall for one of these scams, they usually don’t have the time or ability to rebuild another cache of savings.

One of the most common scams occurs when individuals go around speaking highly of a worthless stock in order to get people to invest in it. Once these investors drive the price up, the con artists will quickly sell off their shares and leave innocent victims with stocks that aren’t worth anything.

There are also times, however, when these thieves will create “dummy” companies whose names resemble popular corporations in order to con others into investing. Regardless of the method used, however, those hoping to invest in the stock market do have a few ways of protecting themselves from scams.

Avoiding Stock Scams

There are a variety of ways that everyone, both young and old alike, can protect themselves from stock scams. In reality, these methods aren’t difficult to abide by; it’s simply important for potential investors to remain vigilant.

Be Weary of Unsolicited Contacts:

It’s not likely that a legitimate stockbroker will choose to contact someone if unsolicited. Scam artists will often do this by mail, phone, email and even fax. It’s best to avoid this risk.

Too Good to be True:

When something seems too good to be true, it usually is. Anyone offering low-priced stocks that they believe will soon skyrocket should be considered suspect.


Anyone making guarantees about a stock should immediately be ignored. Even the best stocks aren’t guaranteed to turn a profit, so this is a promise that surely cannot be kept.

After Being Scammed

Anyone who thinks they’ve been caught up in a stock scam should take immediate action. It’ll be necessary to alert the Securities and Exchange Commission (SEC), but once this occurs, it’s likely that those who perpetrated the scheme will quickly try to get away with any ill-gotten funds. This is why it’s often a good idea to seek out legal help first.

A securities fraud attorney is adept at protecting victims of stock scams, Ponzi schemes and other forms of securities fraud. He is also experienced in investigating these types of cases in a way that increases the likelihood that his clients will be reimbursed. In addition, he can report the crime directly to the SEC himself.

Stock market fraudsters are among the lowest forms of criminals out there. They prey upon the financial needs of the victims that they target, and sadly, they often focus on a seemingly defenseless elderly population. Luckily, anyone can avoid becoming a victim if they take the right steps, and avoiding fraud on the stock market is a good way to ensure a sound investment.

Debbie Nguyen is a freelance designer and blogger in the Atlanta area. Her family works diligently to protect her retired mother’s savings from potential con artists preying on the elderly. They have her estate in order and a¬†securities fraud attorney on hand should anything out of the ordinary happen.

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