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Never Invest in a Company Started or Managed by Your Stockbroker, Insurance Agent, or Investment Advisor

Never Invest in a Company Started or Managed by Your Stockbroker, Insurance Agent, or Investment Advisor

The United States Securities & Exchange Commission recently sued a Colorado investment advisor for fraudulently convincing his clients to invest in a company he started and owned.  The SEC alleges that the investment advisor misrepresented his credentials, the purported safety of the investments he was selling, and his success in creating and operating such companies in the past.  These poor victims violated a cardinal rule of investing:  

You should never invest in any company created or managed by your stockbroker, insurance agent, or investment advisor unless and until:

  • You thoroughly check out the so-called “investment opportunity” by having your CPA or lawyer look into it; and
  • You are ready and willing to lose the entire investment.

I estimate that I have represented at least 200 hundred people down through the years who made this mistake and lost all of their money.  Fortunately, we were able to recover a large majority of those losses for those victims because the stockbroker, insurance agent, or crooked investment advisor worked for or was affiliated with a large insurance company or brokerage firm that allowed us to sue the companies where the fraudster worked because those large companies failed to properly supervise the unscrupulous advisor.  

Nevertheless, a couple of years ago we were contacted by a large group of approximately 200 victims of a large securities fraud where the fraudster promised “guaranteed” 10 percent returns on “safe investments,” which the fraudster was purportedly investing in various real estate schemes.  By the time the victims reached our law firm, the SEC had sued the fraudster, the money was gone, and there was nowhere to turn for relief for the victims.

It is extremely important that the average investor not invest in a scheme that has been started, created, or otherwise managed by the person who is soliciting and pitching the investment being sold.  If you find that you or a loved one may have been victimized, it is very important that you contact a lawyer as quickly as possible.  Contact Starr Austen & Miller for a free no obligation consultation.  

Written by Scott L. Starr

September 28, 2017