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Never invest in a product that you don't fully understand. Consult information sources such as business and financial publications. Information regarding the fundamentals of investing and basic financial terminology can be found at your local library.

Ask your sales representative for the prospectus, offering circular, or most recent annual report – and the "Options Disclosure Document" if you are investing in options. Read them. If you have questions, talk with your sales representative before investing.

You also may want to check with another brokerage firm, an accountant, or a trusted business adviser to get a second opinion about a particular investment you are considering.

Keep good records of all information you receive, copies of forms you sign, and conversations you have with your sales representative.

Nobody invests to lose money. However, investments always entail some degree of risk. Be aware that:

  1. The higher the expected rate of return, the greater the risk; depending on market developments, you could lose some or all of your initial investment, or a greater amount.

  2. Some investments cannot easily be sold or converted to cash. Check to see if there is any penalty or charge if you must sell an investment quickly or before its maturity date.

  3. Investments in securities issued by a company with little or no operating history or published information may involve greater risk.

  4. Securities investments, including mutual funds, are NOT federally insured against a loss in market value.

  5. Securities you own may be subject to tender offers, mergers, reorganizations, or third party actions that can affect the value of your ownership interest. Pay careful attention to public announcements and information sent to you about such transactions. They involve complex investment decisions. Be sure you fully understand the terms of any offer to exchange or sell your shares before you act. In some cases, such as partial or two-tier tender offers, failure to act can have detrimental effects on your investment.

  6. The past success of a particular investment is no guarantee of future performance.

Protect Yourself

A high pressure sales pitch can mean trouble. Be suspicious of anyone who tells you, "Invest quickly or you will miss out on a once in a lifetime opportunity."


  • Never send money to purchase an investment based simply on a telephone sales pitch.

  • Never make a check out to a sales representative.

  • Never send checks to an address different from the business address of the brokerage firm or a designated address listed in the prospectus.

If your sales representative asks you to do any of these things, contact the branch manager or compliance officer of the brokerage firm.

Never allow your transaction confirmations and account statements to be delivered or mailed to your sales representative as a substitute for receiving them yourself. These documents are your official record of the date, time, amount, and price of each security purchased or sold. Verify that the information in these statements is correct.

Certain activities may indicate problems in the handling of your account and, possibly, violations of state and federal securities laws.

Be alert for:

  1. Recommendations from a sales representative based on "inside" or "confidential information," an "upcoming favorable research report," a "prospective merger or acquisition," or the announcement of a "dynamic new product."

  2. Representations of spectacular profit, such as, "Your money will double in six months." Remember, if it sounds too good to be true, it probably is!

  3. "Guarantees" that you will not lose money on a particular securities transaction, or agreements by a sales representative to share in any losses in your account.

  4. An excessive number of transactions in your account. Such activity generates additional commissions for your sales representative, but may provide no better investment opportunities for you.

  5. A recommendation from your sales representative that you make a dramatic change in your investment strategy, such as moving from low risk investments to speculative securities, or concentrating your investments exclusively in a single product.

  6. Switching your investment in a mutual fund to a different fund with the same or similar investment objectives. Unless there is a legitimate investment purpose, a switch recommended by your sales representative may simply be an attempt to generate additional commissions for the sales representative.

  7. Pressure to trade the account in a manner that is inconsistent with your investment goals and the risk you want or can afford to take.

  8. Assurances from your sales representative that an error in your account is due solely to computer or clerical error. Insist that the branch manager or compliance officer promptly send you a written explanation. Verify that the problem has been corrected on your next account statement.

If You Have a Problem

If you have a problem with your sales representative or your account, promptly talk to the sales representative's manager or the firm's compliance officer. Confirm your complaint to the firm in writing. Keep written records of all conversations. Ask for written explanations.

If the problem is not resolved to your satisfaction, contact the appropriate regulators listed at the end of this document. Investor complaint information assists these regulators in identifying violations of the securities laws and prosecuting violators. However, none of these organizations is authorized to provide legal representation to individual investors or to get your money back for you.

Obtain information on using arbitration to resolve your dispute by contacting the FINRA, New York Stock ExchangeMunicipal Securities Rulemaking Board, Chicago Board Options Exchage, or Chicago Stock Exchange. Each of these organizations operates a forum to resolve disputes between brokerage firms and their customers. It may be desirable to consult an attorney knowledgeable about securities laws. Your local bar association can assist you in locating a securities attorney.

Securities Regulators To Contact

U.S. Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Office of Investor Education and Assistance
Online Complaint Form

North American Securities Administrators Association, Inc.
Suite 710
10 G Street, NE
Washington, DC 20002
(202) 737-0900

Each state has its own securities regulator. You can find your regulator at the website of the North American Securities Administrators Association.