If a person thinks they are a victim of fraud from a broker or company, who should be contacted?
Sorry to hear that you might be the victim of fraud. I suggest that you contact the broker’s employer and file a complaint. If you get nowhere, contact FINRA. In the mean time you can also perform a background check on FINRA’s website to see if this broker or company has had similar complaints in the past.
Just as a note, some financial professionals are fiduciary investment advisors. If you happen to be working with an investment advisor instead of a broker, contact your states securities regulator or the SEC (the oversight authority will depend on how much assets under management the advisor has).
If you are indeed working with a broker, you most likely signed an arbitration and mediation agreement, which means that you’ll have to agree to FINRA arbitration. This forum is controlled by the industry from which these disputes arise. It’s basically the financial professionals regulating financial professionals. Because of this there are suggestions of conflict and bias.
Also, when working with a broker, the threshold for proving client abuse is higher than it is with a fiduciary investment advisor. Unlike fiduciary investment advisors, who by law must work in your best interest, broker/advisors are allowed to only prove “suitability” of their advice for the client. “Suitability” is more open to interpretation. For example, maybe a broker/advisor can illustrate suitability of an in-house, proprietary index fund that’s part of a wrap program of 2.5% and that also has a 1% expense ratio with .1% administrative fees. For a fiduciary investment advisor, that fund would not be in the client’s best interest because index funds these days cost close to 0bps. Similarly, many variable annuities may be “suitable” for clients, but best interest is certainly doubtful. Good luck.
Read more answers from Dejan on the Investopedia Advisor Insights Network.