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Brokerage fraud : what Wall Street doesn't want you to know /

Only a fraction of defrauded investors ever realise it. Here, securities fraud experts unveil valuable secrets that every investor should know to protect their assets. Full description

Main Author: Stoneman, Tracy Pride.
Other Authors: Schulz, Douglas J.
Format: Book
Language: English
Published: Dearborn Trade Pub., 2002
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SUMMARY

The public has been bombarded with the benefits of investing. Yet, what brokerage firms and stockbrokers fail to tell individuals is how the security industry bends and breaks the rules to the detriment of investors. Only a fraction of investors ever realise it, and even fewer take action. Brokerage Fraud unveils valuable secrets that every investor should know to protect his or her assets. Readers will learn: The top abuses seen in brokerage accounts; Tricks and defenses investment firms use to immobilise investors they've wronged; Unique conflicts of interest that occur with online and traditional firms; How to select ethical brokers and advisors; How to evaluate current brokers or firms; Steps investors can take to recoup their losses, if they think they've been wronged.


TABLE OF CONTENTS

Forewordp. xiii
Prefacep. xvii
1.The Brokerage Industry: More Secretive Than You Knowp. 1
Brokers Make Millions--Without Being on a Stupid Game Showp. 1
What's Glossy on the Outside and Tarnished on the Inside?p. 2
A Peek into This Highly Guarded and Highly Regulated Industryp. 5
Crime Pays--Themp. 9
Why Firms Don't Clean Up Their Acts--The Just-Say-No Syndromep. 12
SIPC--A Rarely Useful Bandagep. 14
2.Conflicts of Interest: Which Side Are Firms Really On?p. 16
Identifying the Conflicts--We Said Conflicts, Not Convictsp. 16
Commissions, Markups, and Fee--Cake with Lots of Icingp. 17
The Spreads--The Hidden Profit Center but Not for Youp. 24
Margin--The Costly Double-Edged Swordp. 25
Broker Compensation and Perks--You Paid for That Benzp. 26
Contests--You're in Springfield; Your Broker's in Mauip. 31
Analyst Research Reports--Tarot Card Readers Scoffp. 34
3.Stockbrokers Are Salespeoplep. 43
Broker Qualifications--Did Your Broker Go to College?p. 44
Broker Ranking--Number One Because of You!p. 46
Broker Titles--A Dime a Dozenp. 49
Broker Training--Sell, Sell, Sellp. 50
Smiling and Dialing--The Art of Cold Callingp. 52
Sales Scripts--"It's Going Fast!"p. 56
Broker Book Turnover--Not a Breakfast Treatp. 60
Broker Hopscotch--All the Way to the Bankp. 61
4.Suitability: The Number One Abuse in the Industryp. 67
The ABCs of Suitability Analysisp. 70
Common Brokerage Firm Defensesp. 75
The Solicited versus the Unsolicited Trickp. 77
5.Tricks of the Trade: What Wall Street Really Doesn't Want You to Knowp. 82
Fraud--The Root of All Evilp. 82
Unauthorized Trading--A Deadly Violation That Few Understandp. 91
Churning--Buy It, Sell It, and Buy It Back Againp. 100
Margin--An Incredible Conflict and Profit Centerp. 105
Overconcentration--Too Much of a Good Thing?p. 111
Selling Away--Want to Buy a Bridge?p. 113
Outside Business Practices--Working Both Sides of the Streetp. 115
Insider Trading--No Jokes, No Hints, No Inferencesp. 116
Circulation of Rumors--If You Don't Want It Repeatedp. 118
Order Failure and Improper Execution--Violation of the 21st Centuryp. 119
Promises and Guarantees--Words That Should Never Cross Lipsp. 119
Sharing in Profits--How About Sharing in the Losses?p. 120
Rebates and Compensation--Kickbacks Is What You Know It Asp. 120
Front Running, Bunching, and Position Building--Hard to Catchp. 121
Supervision and How Brokers Dodge It--Circumventing the Guardsp. 124
6.The Regulators: Whose Side Are They Really On?p. 131
The NASD--The Fox Guarding the Henhousep. 132
No Security Blanketp. 135
Regulating Questionable Firmsp. 137
Too Little, Too Latep. 140
7.Industry Forms and Paperwork: The Hidden Agendap. 142
The Customer Agreement--You're Stuck with Itp. 143
The New Account Form--More Important Than You Thinkp. 147
The Options-Trading Application--License to Losep. 149
Order Tickets--Dinosaurs but Still Key Documentsp. 151
Confirmations--A Nonevent It's Hopedp. 153
Monthly Statements--Who Really Reads Them?p. 153
8.Online Trading: Are You on Your Own?p. 156
The No-Duty Stance--Wow!p. 156
The Regulators' Inputp. 161
9.Online Trading: Step into My Web Site, Said the Spider to the Flyp. 167
Marketing--You Never Knew You Were Worth So Muchp. 170
An Online Firm Story--We Hope You're Pleased with Our Disservicep. 172
Order Failure--But They Promised They Were Betterp. 174
Margin and Sellouts--You Take the Risks, They Take the Moneyp. 177
Online Trading Tips--Did Someone Say Tips?p. 179
Payment for Order Flow--Helps Their Bottom Line, Not Yoursp. 184
Supervision of Your Online Account--An Oxymoronp. 185
After-Hours Trading--Fools Rush In, Where Angels Dare to Treadp. 187
10.Bucket Shops and Boiler Roomsp. 190
Learning the Lingo--A Primerp. 190
Here Today, Gone Tomorrow--With Your Moneyp. 192
Clearing Firms as Life Supportp. 195
Lots of Profit and Little Liability--We Should All Clearp. 197
11.What to Do When Things Go Awryp. 202
When to Write a Complaint Letterp. 203
Hiring Lawyers and Expertsp. 205
Forget Your Right to a Jury Trialp. 207
Arbitration--Fair Shake or Milk Shake?p. 209
12.Inundated with Choices: Distinguishing the Playersp. 217
One-Stop Shopping--Can't Tell the Players without a Score Cardp. 218
Mutual Fund Managers and Families of Fundsp. 220
Money Managersp. 221
Financial Plannersp. 222
Stockbrokersp. 223
Brokerage Firm Wrap Accountsp. 224
Brokerage Firm In-House Managementp. 226
Factors to Use in Choosing from the Options Listed Abovep. 227
Insurance Agentsp. 231
Bankersp. 232
Investment Newslettersp. 234
No One Really Knowsp. 236
13.Selecting and Evaluating a Stockbrokerp. 238
Being a Client versus Being a Customerp. 240
What a Client Should Expect from His Broker or Advisorp. 242
Mazerati or Chevroletp. 243
More Traits of a Good Broker or Advisorp. 244
Multiple Accounts for Multiple Reasonsp. 246
How to Get the Skinny on Your Brokerp. 246
The Small Brokerage Firm--Is Bigger Better?p. 250
14.What You Need to Know about Specific Investment Products and Strategiesp. 252
Insurance--A Basic Necessity butp. 253
Annuities--All about Taxes and Feesp. 257
Bonds--Boring but a Great alternativep. 260
Commodities--Bend Overp. 262
IPOs--The Roller Coasters of the Industryp. 265
Limited Partnerships--Hide under the Bedp. 267
Private Placements--Under the Bed Is Not a Good-Enough Hiding Placep. 271
Mutual Funds--The Great Equalizersp. 272
Options--Vegas Never Offered So Muchp. 276
Selling Short--Playing Both Sides of the Same Gamep. 279
15.It's Your Money, Do What You Want to Do, We Can't Tell You Who to Sock It Top. 281
The Initial Interview--Have You Had Yours?p. 281
Your Investment Objectives--The Underlying Essentialsp. 282
Setting a Game Plan--Getting Seriousp. 285
Commingling Your Money--Just Don't Do Itp. 288
Conclusionp. 291
Endnotesp. 293
Indexp. 303


Review by Library Journal Review

Stoneman, an attorney who specializes in securities cases, and Schulz, a former broker turned securities fraud consultant, have produced a guide to fraud in the securities industry for the individual investor. They describe the common types of misconduct, how to detect fraud, the actions to take, the role of regulatory bodies, and how arbitration works. Though the book includes two chapters on online trading and concludes with several chapters on choosing investments and financial advisers, it focuses on dealing with brokerage fraud; the authors even provide their phone numbers and web sites for prospective clients. The writing style is straightforward and somewhat informal, but a lot of technical information is provided. Because of its up-to-date coverage and moderate price, this book is recommended for all public libraries, even those with small investment collections. It is also appropriate as an introductory or supplemental offering in academic libraries supporting finance collections. Lawrence R. Maxted, Gannon Univ., Erie, PA (c) Copyright 2010. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.

(c) Copyright Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
AUTHOR NOTES

Douglas J. Schulz is a reformed broker with more than 20 years' experience in the securities industry as an advisor, consultant, author, and sought-after expert witness for securities fraud cases. He is frequently quoted in general news, business, and legal publications nationwide, and was a source in the national bestseller, "Serpent on the Rock".