Having your money taken from you by a stranger is one thing, but having it stolen by someone you trust is completely different.
In 2016 the Commissioner of Securities and Insurance received information about an individual in Townsend who lost a sizable about of money to an investment firm. The CSI reached out to the investor and confirmed they had invested over 300,000 dollars and all the money was gone because of excessive trading on the account. Lynne Egan the Deputy Securities Commissioner says this type of fraud tends to happen more in a strong financial market.
“People get overly confident when the market is strong, and they aren’t necessarily looking at their broker dealers’ statements and they are not opening their mail because the markets going up and they assume they’re making money. We have seen a lot of these kinds of cases of excessive trading,” said Egan.
Egan went on to say the best ways to protect yourself from fraud is to pay attention to trading as it takes place. If only the broker is making money and you are not, there is likely something wrong. Egan says to be forward and frank with your broker about what your investment objectives are, and the most important thing you can do to protect yourself is to call the Montana State Auditor's Office if you see anything unusual.
As for this particular case, it took about 18 months for the CSI to process the claim. In the consent agreement the firm, supervisors and sales people agreed to pay fines and restitution to the victims.