Investment Newsletters – South Florida Investment Newsletter Fraud and Misrepresentation Litigation and FINRA Arbitration Attorney

Fort Lauderdale, Pompano Beach, Lighthouse Point, Deerfield Beach and Boca Raton, Florida Investment Newsletter Fraud and Misrepresentation Litigation and Arbitration Attorney:

Investment newsletters come in many forms. They may be found online or in hard copy; they may be available for a fee or free of charge. Some newsletters address general securities topics, such as which types of stocks, bonds, or funds might make good investments. Others may provide commentary and analysis about particular companies, investment products, or financial trends.

While many investment newsletters are legitimate, some are used to carry out schemes designed to deceive investors. Such schemes can include:

  • Touting – promoting a stock without properly disclosing compensation received for promoting the stock.
  • Pump and dump schemes – pumping up a company’s stock price by making false and misleading statements to create a buying frenzy, and then selling shares at the pumped up price.
  • Scalping – recommending a stock to drive up the stock price and then selling shares of the stock at inflated prices to generate profits.
  • Undisclosed conflicts of interest – falsely claiming to provide independent analysis or failing to explain conflicts of interest (or biases), including financial incentives, that may influence the investment recommendations.
  • False performance claims – misrepresenting the track record of the newsletter’s investment recommendations.

Some investment newsletters claim to be sources of unbiased information, when in fact the newsletter publisher will make a lot of money if the newsletter convinces investors to buy or sell particular stocks. Do not take comfort because a newsletter encourages you to purchase or sell a stock through your own brokerage account. Even if you do not give the newsletter publisher any money to place trades for you, the newsletter publisher may profit from your trading activity. For example, you may purchase a stock (causing the stock price to rise) and then the newsletter publisher may sell its shares of that stock (profiting at your expense).

If a newsletter promotes a particular stock, read carefully what the newsletter says about compensation it receives and look for these red flags:

  • No disclosures. Be suspicious if the newsletter does not disclose having received any compensation.
  • Vague disclosures. Be skeptical of newsletters that do not specifically disclose who paid them, the amount, and the type of payment.
  • Buried disclosures. Be wary if the newsletter’s disclosures are difficult to find or appear in tiny, hard-to-read print.
  • Questions about your stock purchases. Be careful if a newsletter representative asks you detailed questions about your stock purchases like how many shares you bought, when you purchased the shares, or which broker you used to buy the shares. The newsletter publisher may make money based on the amount of shares its subscribers buy.

Even if a newsletter makes specific disclosures about being compensated for promoting a stock, be aware that fraudsters may include such disclosures to create the false appearance that the newsletter is legitimate.

Fraudsters may also use newsletters as a way to get their foot in the door to pitch fraudulent investments by phone. Be careful if someone tries to get you to subscribe to a newsletter and then calls you with specific investment recommendations.

When considering any potential investment, watch out for these warning signs of investment fraud:

  • Promises of high investment returns. Be highly suspicious if the promoter guarantees you a high rate of return on your investment.
  • Pressure to buy RIGHT NOW. Be skeptical if the promoter pitches the investment as a “limited time only” opportunity, especially if the promoter claims to base the recommendation on “inside” or confidential information.
  • Sounds too good to be true. Exercise caution if the investment sounds too good to be true. Investments providing higher returns typically involve more risk.

Please keep in mind that the above information is being provided for educational purposes only.  It is not designed to be complete in all material respects.  Thus, it should not be relied upon as legal or investment advice.  If you have any questions concerning the contents of this post, please contact a qualified professional.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Fort Lauderdale Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

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