Tags: Wall Street | adviser | invest | fraud

Wolves Still Roam Wall Street

By    |   Friday, 24 Jan 2014 06:43 AM

Wall Street excesses are on display in the popular movie "The Wolf of Wall Street." The unrestrained behaviors shown in the film were funded by fraud and deceit. Unfortunately, fraud and deceit have not been eliminated from Wall Street.

In 2012, the latest available data, more than 1,500 brokers, financial advisers and other individuals handling investors' money were disciplined by regulators, who imposed fines totaling $68 million and ordered restitution of $34 million.

To the individual investors involved, discipline against the responsible party might provide some measure of justice, but there is no guarantee restitution will be paid.

Most fraudulent advisers can be avoided by following two simple rules: 1) if it sounds too good to be true, it probably is, and 2) never allow anyone but a reputable brokerage firm hold your money.

Junk bonds yield about 8 percent. It is unlikely any fixed-investment opportunity will yield more than twice that amount. High yields sounding too good to be true, especially when the risks are ignored, are a warning that something might not be right. Stock-trading strategies can provide high returns, but as Bernie Madoff demonstrated, those returns should be obtained in an account that is independently verified.

If it is a legitimate investment, it will usually be safeguarded by an independent custodian. Regulated advisers will not usually accept money directly or hold securities for clients. They will use an independent custodian who generates statements showing what is really in the account. Madoff was able to keep his Ponzi scheme going because he held onto all of his clients' funds.

It is important to remember that the bad behavior seen in movies can and does occur in real life. A minimal level of investigation could protect your investments.

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MichaelCarr
Wall Street excesses are on display in the popular movie "The Wolf of Wall Street." The unrestrained behaviors shown in the film were funded by fraud and deceit. Unfortunately, fraud and deceit have not been eliminated from Wall Street.
Wall Street,adviser,invest,fraud
289
2014-43-24
Friday, 24 Jan 2014 06:43 AM
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