Here today, gone tomorrow. If that sums up your experience with your broker, then you have fallen victim to a common scam. The problem of brokers disappearing means the brokerage was not a real company in the first place. This is a so-called Boiler Room scam was featured in the movies The Wolf of Wall Street and Boiler Room. However, this doesn’t just happen in the movies, but is all-too-real.
Boiler room scams are operated out of what appear to be legitimate offices or headquarters. Customers may believe that the broker is a credible operation because they seem to have a set address, not like those other scammers who are operating from who knows where and try to grab people on the web.
The boiler room broker may have a professional-looking website, polished content, an About Us page complete with pictures of brokers and employees (hint: if these look like stock photos, they probably are), and a display of fake credentials or a license that is real but from a regulator with little oversight.
How These Scam Work
The story of brokers disappearing happens when things seem to be going well. Because the brokerage seems like a real entity with a physical office and a reputation to uphold, clients place their confidence and their funds into the hands of these scammers.
They may claim the client isn’t making money on the trade because they need to invest more. When the client loses again, they promise the client will regain all of his or her losses and make a fortune with just one more investment. Then suddenly, the broker is never heard of again. That is the first inkling many clients have that they have been duped–when it is too late.
The case of brokers disappearing may occur when the broker has made trades for the client but was more interested in getting commissions for every trade than for creating value for the customer. In other cases, the brokers do not invest the money at all, collect fees and take off with the original “investment.”
Sometimes, these people run a Ponzi scheme which is a kind of revolving door which lets the scam broker pay off clients who make withdrawals with other clients’ money. If many clients request withdrawals, the scammers simply disappear with all of the money. Their address was a fake one, or they rented it out temporarily are gone. They did not give their real name and may have paid their office rent in cash or cryptocurrency.
How To Tell If Your Broker Is About to Disappear?
If you are already suspicious of your broker, the following are signs that he or she may be ready to make a run for it:
- The broker has a large amount of your money
- The broker senses you are not going to invest any more funds for awhile
- You have asked for a large withdrawal and it has been denied
- Communication with the broker has slowed down or stopped
- The broker is increasingly evasive
Any of these signs should cause you to switch brokers, but if they won’t return your money, you may feel trapped and at a loss about what to do.
Can You Get Your Money Back If a Broker Disappears?
Brokers disappearing and creating a fake identity may seem impossible to track down. However, Scam Surivors experts have the training and the industry experience to find scam artists, discover their true identities and return customers’ money.
Consult with us if you have fallen victim to a scam. Brokers disappearing doesn’t mean your funds are lost forever. We have the tools and the insight to track down the thieves and get your money back.