FINRA Investor Alert: Inspecting Account Statements Helps Investors Detect Securities Fraud

by InvestorLawyers on March 1, 2012

in FINRA,Suitability,Unauthorized Trading

Securities fraud often goes undetected because investors either don’t understand or don’t closely inspect their account statements from their securities firm. On February 23, 2012, the Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called “It Pays to Understand Your Brokerage Account Statements and Trade Confirmations.” This Investor Alert is designed to help investors to better understand their account statements. A careful inspection of account statements can help investors detect errors and broker misconduct, including overcharges and unauthorized transactions.

FINRA Investor Alert: Inspecting Account Statements Helps Investors Detect Securities Fraud

FINRA’s Vice President for Investor Education, Gerri Walsh, in a FINRA press release about the Investor Alert stated, “Investors whose portfolios have taken a hit might not be keen to open their account statements, but investors should review their statements carefully. Investors should also review trade confirmations as soon as they receive them because a single keystroke can make the difference between 100 and 1,000 shares.”

The Investor Alert uses plain language to detail to investors their account statements’ key elements and “red flags” that could indicate to investors that misconduct or mistakes may have occurred. Investors should also look for their investment objective, which is listed on many account statements. This investment objective will indicate the investor’s strategy and will contain words such as “conservative” or “growth.” This description – and the account activity – should accurately reflect the goals of the investor.

Furthermore, FINRA’s Investor Alert explains the difference between quarterly account statements and consolidated account statements, as well as the importance of reviewing quarterly account statements, even if consolidated account statements are provided. The Alert also discusses trade confirmations and how they disclose whether the firm acted as a principal or the broker acted as the investor’s agent, and what this means to the investor.

If, while inspecting statements, investors find abnormalities that indicate securities fraud may have occurred, they should contact an investment attorney immediately to find out more about their legal rights and options. If you believe you have suffered losses as a result of securities fraud, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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