Customer Reviews

Brokerage Fraud

5 star:		(12)
4 star:		(0)
3 star:		(0)
2 star:		(1)
1 star:		(0)

 

 

Had "Brokerage Fraud" been available to my wife and I eight years ago, it may very well have saved us the fortune we lost to a mercenary industry that promotes itself as caring and responsible, when in fact it cares mostly for itself.

"Brokerage Fraud" might have been subtitled, "What You Don't Know About The Stock Brokerage Industry Could Wreck Your Dreams." Think of this book as your insurance policy against a devastating financial reversal that could snatch away your home, your business, your childrens' educations, and/or your life savings.

"Brokerage Fraud" is frank and friendly, organized, comprehensive, easy to digest -- and quite unique, too, because the distinguished authors tell all about an autonomous, all-powerful institution that routinely sheers the uninitiated.

My wife and I learned at great cost that the stock brokerage industry profits hugely at the expense of those who trust it too much and know it too little. This important, well-crafted book levels the playing field by giving individual investors the information and the strategies they require to prosper in what's essentially an insider environment.

If you only read one investment book, this is it, and we can't recommend it too highly.

You need to pick a broker more carefully than you pick a physician or a lawyer. Do you know how? Even those who think they know what to look for may not.

I recommend that anyone who has a brokerage account read this book. Brokerage Fraud may be the highest return investment you make in 2001.

As the authors point out, many of the 650,000 stock brokers are honest, hard-working people you can trust. But there are also firms run by criminals who are simply out to separate you from your life savings. In between, there are conflicts of interest, temptation, and bad habits that can be costly to you. The best way to keep your money safe is to know how to select, work with, and monitor your broker. Should you have a problem, this book points out when and how you should try to seek redress. But don't expect to succeed or to recover what you lost.

Most people wouldn't be able to write such a book. Problems with brokers normally are handled through arbitration, as required in the contract you sign when you open a brokerage account. The results of such arbitrations are usually secret. Ms. Stoneman has worked as an attorney on arbitrations in this area, and can speak from her experience. Mr. Schulz was a stock broker and does expert witness work during arbitrations.

In the foreword, Kurt Eichenwald (senior writer at The New York Times and a best-selling business author) notes, "Don't pay brokers for trading -- just for making money." But you'll have a hard time finding a broker who will be willing to get paid on that basis.

As the old saying goes, "Where are the customer's yachts?" In 2000, the average stock broker had an income of $180,300 and was part of a household with a total net worth over a million dollars. How many of their customers are doing as well from their investments?

The basic problem is: "Every day hundreds of investors are defrauded of millions of dollars. Yet the vast majority does not pursue a remedy." Part of the problem is that the brokerage firms deny doing anything wrong early in the game. Complaints not in writing will be ignored. Write a complaint without an attorney to help you, and you may weaken your case. Legal redress is going to be expensive . . . even on a contingent fee basis (often running from 33-50% of the recovery).

Many people don't know that SEC regulations grant many rights to investors in dealing with their brokers. This book explains what those rights are. The horror stories of what to avoid are worth the price of the book. For example, if you place an order on-line that disappears, you may call up and be told it is gone. So you place another order. Sometimes, the first order shows up and you have two orders -- both of which are executed. Some firms will stick you with the problem. In extreme cases, this may trigger a margin call and you may get sold out of both positions at an enormous loss -- even before you know you have a problem. My advice after reading this book is: NEVER PLACE A DUPLICATE ORDER ON-LINE!

Some of the basics are covered here too. Did you know that the higher the commission rate a broker receives, usually the higher risk an investment is? I learned this the hard way after buying into limited partnerships. A friend told me that his wife was an auditor for the IRS, and had never seen a limited partnership that paid a cash-on-cash profit (ever after the tax benefits) in all of her years of auditing. Since then, I don't buy limited partnerships.

Did you know that the SIPC insurance only covers when the firm goes insolvent, not if you have a claim against them? The biggest crooks disappear without paying any of the arbitration awards charged against them.

The book does a fine job of explaining how brokers are paid to move the financial products that earn their firms the most money, not the ones that best fit your situation. There is a hilarious example of a Bear, Stearns sell-side analyst writing optimistically about a company headed for bankruptcy after Bear, Stearns did some bond underwriting for that company. In the meantime, the financial press was correctly warning that the company was headed down, down, and down.

There are lots of good suggestions for how to check out a brokerage firm and a broker (including seeing what complaints have been made). I was impressed with the suggestions for how those with larger accounts can get help unraveling problems at on-line brokers.

The descriptions of what's going on at those firms that call me three times a day saying, "This is Joe Quick Fingers, and I work with the Fly by Night Investment Bank. I just want to give you a few recommendations, and let you see how they turn out.." were priceless! These calls are often from boiler rooms, and you will find out why they are usually lethal to your wealth. You will also find out about which brokers routinely clear trades for boiler room operators, helping to give Fly by Night Investment Bank a false patina of legitimacy.

In between, there are standard methods to clip you like front running, taking kickbacks, putting a trade into the aftermarket when the spreads are larger, and just plain churning (unnecessary trading).

If you do get taken, you'll know if you can hope to succeed and how to get help. I really hope you won't need this part of the book!

Be forewarned in order to keep your money safe . . . before, during, and after you invest!

I would recommend this book not only to those persons with little or no experience in the investment world, but to those with some knowledge of and experience in the industry!

I am an attorney and an investor. Yet, I must say that each chapter of 'Brokerage Fraud' brought new information and insight that is invaluable.

Readers of this book will find it informative, entertaining, and at times quite humorous.

This book will also arm you with enough information to make intelligent decisions about your money and with whom to place it.
You might even want to send this book to your current broker!

Frank E. Needham

As a former broker and current investor, Brokerage Fraud is a compelling read. The authors pulled no punches and gave an honest & informative investigative report on brokers. An investor who is serious about his/her investments should immediately read this book. Wall Street is not perfect nor are its brokers; however there should be no excuse for an investor not to inform himself with the ammunition that this book provides. Ask your broker questions, don't be shy - a good honest broker has nothing to fear. Kudos to the authors of this book for showing the public how business should be conducted.

Actually, I picked this book up at my local library because it was just sitting there and it didn't cost anything. But to my surprise it was a very informative book.

Like all books and readers, no shoe fits all but the author did try and was successful as far as I'm concerned.

After this reading, I definitely see my broker in a different light. As an options trader, I've learned things that were right there in front of me and just didn't see it. Great info regarding industry tricks.

There was too much detail in certain areas but you can speed read those and continue to you find the gems that appeal to you. Very good read.

Best wishes

In many things it is better to say "Know thyself" but if you have a brokerage account it is best to say "Know others before thyself." This is a wonderfully concise and insightful book. The authors are able to convey their in-depth knowledge in an understandable and direct manner. They describe what to look for, how to detect it, and what action to take if you suspect brokerage misconduct. This book will educate as well as hold your interest.

Brokerage Fraud is very well written and provides an excellent overview of the problems the investing public may encounter when dealing with securities industry. I was surprised how much I learned, and especially considering that I had been previously employed in the securities industry and have practiced securities law for many years.

Review of Brokerage Fraud:

I purchased this book to look into the posibility that there are less than honest brokers out there. Knowing many brokers and having many brokers as friends, I didn't think that a broker could be less than honest. However, reading this book and other articles written by Tracy Pride Stoneman, I quickly realized that there is a lot out there that I didn't know. Brokerage Fraud was an excellent depiction of the real brokerage world. I quickly realized that I have been severely misinformed and am now taking steps to make it right because of this book. I have researched the cases by Tracy Pride Stoneman and Douglas Schulz and am more than impressed with their success. I would not only recommend everyone read this book, but that you look into your current situation and if you have questions or concerns, put a call into Tracy Pride Stoneman or Douglas Schulz - You may be surprised what you uncover. After all, its our money the brokers are playing with!

Tracy Pride Stoneman and Douglas Schulz were way out ahead of the Wall Street fraud/conflict of interest cases at the big brokerage firms. This book basically tells you what you should look for in brokers (and in most cases, the brokers don't want you to know). It really goes back to the old credo "buyer beware". As in selecting any service, you must perform due dillegence in researching and selecting a good broker and the products that are right for your investment goals and strategies. This book tells you how to do this in simple straightforward langauge. Great information here! Excellent on-line trading information and what to do and expect if you do have problems. Information is power and this book is definitley a POWER BOOSTER!

A must-read for anyone with an IRA or long term investments - this book is like a fireside chat with a favorite uncle in the stock business who tells you what to watch for and watch out for. Lots of information in an informal, easy to read format.