Protect Your Money From Crooked Brokers
By Ric Edelman
If you suspect you’re a victim of a crooked broker or financial advisor, contact the person on your own first to work the problem out. If you can’t resolve the problem, contact the advisor’s branch manager and explain the situation. Seek a quick resolution. During the phone call, take notes of your conversation.
Put it in Writing
If a solution is not forthcoming, contact the branch manager again -- but this time in writing, not over the phone, and make sure you mail your letter via the post office, Return Receipt Requested, so you have evidence they received your letter. In your letter, state:
- What happened;
- What you want done about it;
- A deadline for compliance; and
- Punishment if they fail to meet the deadline.
Simply writing that you want your money back isn’t good enough. Say instead, “I want my money back by DATE. If you don’t comply, I’m going to do X.” Be clear. And make sure you are non-threatening, but firm; don’t sound emotional.
If they do not meet your terms before the deadline, call them on the morning of the deadline, giving them one last chance to meet your demands. Tell the branch manager that, “Today’s the deadline. This is your last chance to comply before I do X. Are you going to correct this problem or not?” If the firm fails to act, immediately carry out your threat. If you don’t, you’ll lose credibility and anything you say in the future will not be taken seriously.
Who to Contact for Help
When you are forced to take action, you have two choices: You can contact an attorney or the National Association of Securities Dealers Regulation to file for arbitration. (The NASDR regulates and supervises stockbrokers and their firms.) I suggest you do the latter, because it will be cheaper and quicker than hiring a lawyer.
After you file your complaint with the NASDR, it will seek a response from the brokerage firm. The NASDR will then either make a ruling or call a hearing to take testimony to decide who is right. Like a judge, the arbitrator’s decision is final and legally binding on both parties.