Washington State Department of Financial Institutions

How to Protect Your Money From Theft by Dishonest Investment Advisers

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Here's What You Can Do To Protect Yourself

  1. Investigate the investment adviser and salesperson thoroughly.

    First, call your state securities agency to find out if he or she is properly licensed to provide investment advice. If the individual also is licensed as a stockbroker, background information will be available through your state securities agency from the Central Registration Depository (CRD) - a computerized reference system operated jointly by the North American Securities Administrators Association (NASAA) and the Financial Industry Regulatory Authority (FINRA). Call the Department of Financial Institutions Securities Division at 360-902-8760 or 1-877-RING DFI (1-877-746-4334) to check out the investment adviser or investment adviser representative.

  2. Is the investment opportunity registered for sale in the state in which you live?

    Call the Securities Division at 360-902-8760 or 1-877-RING DFI (1-877-746-4334) to find out. All investment opportunities must be registered or exempt. If one being recommended to you isn't registered or exempt, consider that a red warning flag to investigate further. Ask for written "disclosure" information. Review it carefully and make sure that you understand all of the risks involved. If you have questions, ask, and keep asking until you get an answer you understand. If you're pressured by an investment adviser to make a hasty decision, just say "no." After all, it is your money.

  3. Always stay in charge of your money.

    Protect your nest egg. If the world of investments baffles you, carve out time to educate yourself. Read one or more of the many magazines devoted to personal finance on a regular basis. Once you've made an investment, carefully review your account statement. Make sure you know where your money is being held. Generally, you should receive account statements from the custodian of the securities as well as from your investment adviser. Confirm that all transactions are ones you've authorized. Send or call the Securities Division for any of the free brochures listed at the end of this alert.

  4. Remember that con artists are usually extremely polite.

    Here's how you will probably be approached: A successful swindler will deliver a professional-sounding sales pitch that makes the flimsiest investment deal sound as safe as putting money in the bank. He or she will be extremely polite, dress in expensive clothes, and may work out of impressive offices with prestigious addresses. Many troll for prospects at houses of worship, country clubs, or senior centers. Others lull investors into complacency by first providing a sound financial service, then moving in for the kill. Before turning over any of your hard-earned money, call The Department of Financial Institutions Securities Division and check out the salesperson and the investment.

  5. Keep greed in check.

    If the return on an investment sounds too good to be true, it probably is. A legitimate adviser should find out about your financial needs and goals, as well as the level of risk you are comfortable with, then suggest a "suitable investment." Don't allow the promise of inflated returns to cloud your judgment. Many people secretly believe that a rags-to-riches story can become a reality for them - if only they get the right break. Con artists play upon the dreamer in all of us. Don't let them sabotage your dreams.

  6. Keep notes about phone conversations and meetings.

    It's important to keep a record of your conversations and meetings between you and your investment adviser. Con artists operate in an atmosphere of trust that persuades people there is no need to keep careful records. But don't be fooled! Be sure to jot down the date, time, and place, as well. By keeping careful notes, you won't have to rely upon your memory if your adviser tells you something down the road that just doesn't seem right. If a lawsuit or dispute does occur, careful notes will set the record straight,

DFI