churning Scams - investing in the stock market
This is a scam done by stock brokers who actively manage funds with the primary intent to not make their clients money but to cheat them out of their money. The scam involves making more trades than an investors wants in order to rack up more brokerage fees. Many times brokers will churn an account until it has little or no money left in it at all. Many times the trading can happen with little or no purpose of making money; worse the investor may not even know what is happening in his or her account. Churning has been a frequent scamming practice in the U.S., which is another reason I recommend that people who like to invest manage their own money. If you open a brokerage account online and buy the stock that you think will go up then you have about a zero percent chance of getting seriously scammed unless the brokerage itself is a scam. You should tell people about the practice of being churned to not only protect yourself but the ones you know around you. There are certain people that are more likely to fall victim to this type of scam and therefore should be extra cautious. Older retired people are the number one victims to scams like this, because many older people don’t understand anything about the stock market or investments at all. Older people simply leave it in the hands of someone else—bad idea because that person may not be there to help them but rather themselves. The other people that fall victim to this scam are people who actually have faith, or have known their broker for months or even years. Older people have stated to me before that they never thought that their friend that they knew for years was actually scamming them but it happens all the time. It’s important to remember that just because someone is a good friend, you are not doing them any favors by not watching what they do with your money. Many people think that it is an insult to ask brokers where their money is going so they simply don’t bother with the task. Scammers are always looking for people who are too shy to ask what they are doing with their money because they are simply best friends. The worst part is that a lot of people think that they are being insulting by asking about and looking into what’s happening in their account. In reality the worst that can happen is you can see whether or not your broker is performing well. Never trust a broker that isn’t very open to what is happening in your account or he or she may be practicing churning or other related scams. |