7 signs of a stockbroker you shouldn't mess with

A stock broker is a professional intermediary between an investor and an exchange, through which people buy and sell securities, trade currencies, and so on. And the broker also registers clients on the stock exchange, keeps records for them and pays income tax for them.

Without such an organization, it is impossible to invest and make money on the exchange, because an intermediary requiresFederal Law of April 22, 1996 No. No. 39-FZ "On the Securities Market" law.

The client trusts the broker not only money, but also sensitive information about himself, so you need to choose wisely. If you get caught by scammers, the losses can be significant. And there are a lot of deceivers now: in the summer of 2021, Russia countedThe Bank of Russia publishes a list of companies with signs of illegal activity / Bank of Russia about 1,800 such companies.

1. License and documents are out of order

The most dangerous thing is the lack of a license for brokerage activities. Without this document, the organization does not have the right to accept clients' money, manage their assets, conduct depository and dealer activities, which means that it is not a broker. The licenses themselves can be checked

on the site Bank of Russia.

To get around this problem, scammers sometimes pretend to be real brokerby skillfully adjusting the name and form of the organization. So, cheaters can use LLC Gamma-trading or JSC Gamma-trade instead of LLC Gamma-trade.

And there are also tricks in the contract itself. Especially in the section that describes what kind of service the investor will receive and what rights and obligations he has. For example, instead of an agreement for brokerage services, they may offer an agreement for consulting services for the opening brokerage account, that is, a completely different service.

2. Many information gaps

Problems can be not only with documents or licenses, but also with available information in general.

• The broker may not disclose the owners, founders and directors. Sometimes this is done so that the client does not know who is at the helm of the company. It is possible that not the most reliable people run it.
• The firm does not explain which exchanges and securities the client will be given access to. If an organization works with questionable forex exchanges on the Internet, it is profitable for it to hide such information to the last.
• It is not clear how the broker makes money. If he does not take the commission, he does not accept assets to be managed, and even ready to double the amount of account replenishment, then it can be "imaginary production". There is no real activity, and the company is not much different from a pyramid scheme.

3. Rating agencies doubt the reliability of the broker

Rating agencies are specialized firms that rate other companies. Professional financiers and auditors work there. Leading agencies in Russia: “ACRA», «National credit ratings», «National rating agency" and "Expert RA».

Specialists of such organizations analyze financial results, analysts' forecasts, customer growth dynamics, public statements of the firm, and so on, and then set a rating, from AAA to C. It is generally accepted to trust companies with credit ratings ranging from AAA (maximum creditworthiness) to BB (moderately low).

The higher the rating, the more reliable the company is. Anything below, up to C (very low level), is a reason, if not to refuse to work with the company, then at least to double-check it.

If there are no ratings at all, it's even worse. The company is either very small, or deliberately dodges external evaluations, or the agency does not consider it a broker. In all cases, it is better to think three times whether it is worth contacting such a company.

4. Poor or missing financial performance

Brokers need to report on performance, and the data will tell a lot. Especially in dynamics. So, a company may have 200 thousand clients now, and two years ago it had one and a half million. This is an alarming sign: why are people leaving?

Net financials can be eloquent too. If revenues fall, debts grow, and capital investments disappear, then the broker is unlikely to have the money to carry out his own activities. Or funds are withdrawn somewhere bypassing reporting - this is not a sign of potential bankruptcy, but of obvious fraudsters.

5. Strongly negative or suspicious reviews

People can complain on social media or on review sites. For example, telling that technical support is rude, the application is buggy, and requests do not leave on time. And the danger is not just inconvenience. So, due to the unstable work of the program investor may not be able to complete the deal and lose money. The broker will not be responsible for this, because in contracts, as a rule, failures in the operation of the application and the exchange are considered force majeure.

If there are no negative reviews or they are covered with a wave of the same type of positive opinions from one-day accounts, this is also a reason to be wary. Unscrupulous companies love and know how to buy fake reviews to lure customers.

6. Commissions are noticeably lower than competitors

Nobody will stop the broker from setting any prices. But there are certain boundaries that the market adheres to: brokers often have two groups of tariffs, “for investors” and “for traders”, And the main commissions in each group are close to each other.

The commission noticeably lower than the market average can be a marketing ploy: collect more customers, make money on the turnover and disappear. Large companies are unlikely to sin this way, but little-known firms are quite capable of such a thing.

7. Broker employees remind of themselves too often

It is possible that aggressive marketing is part of the company's philosophy, they say, we are constantly present in the life of the client. But strong suggestions can also be a sign of deception or problems within the organization.

So, insistent requests to replenish a brokerage account may indicate a lack of free money: the company is trying to plug the gaps with the help of new clients. Or, in general, about financial pyramidfor which quick and non-stop cash infusions are vital.

Constant offers to conclude a trust management agreement may also turn out to be not accidental: if an unscrupulous broker will gain access to assets, he will be able to do anything with them, for example, sell and withdraw money.

Finally, if broker representatives talk about guaranteed profits and no risk all the time, then they are already violatingFederal Law of April 22, 1996 No. No. 39-FZ "On the Securities Market" law. In investments, you can show historical returns or predict the future, but nothing can be guaranteed. Such a company immediately falls into the suspicious category.