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Don’t Let Your Funds “B. Madoff” With

 Financial, Investing  Comments Off
Mar 242013
 

Any well-diversified investment portfolio should include common stock. Many investors are wary of the prospect of market volatility and require the services of a professional stockbroker to manage their holdings. Honest stockbrokers can recommend and execute trades to grow a client’s portfolio, making themselves a valuable aspect of the client’s investment strategy. An unethical stockbroker can cause substantial harm to the client and his or her net worth.

Stockbrokers and Fraud

Stockbrokers with few scruples may drift into outright fraud. Stockbrokers are employed to analyze market activity using sophisticated trading algorithms tempered with their own experience. The sound judgment and advice offered by stockbrokers is why their clients employ their services instead of investing with a discount brokerage firm and managing their own accounts. As a result, investors tend to trust the advice offered by their stockbrokers.

In rare cases, this advice can be self-serving. Unethical stockbrokers can act against their clients’ interests in a few ways. Since stockbrokers are paid on commission for the trades that they execute, they may recommend what amounts to an excessive trading volume. This conduct, called “churning,” involves recommending and executing large numbers of trades in a short period of time in order to accrue additional broker fees. This conduct is illegal. Not every investment strategy will involve long-term holdings and timing trades to expected market activity is critical,

Stockbrokers can also facilitate a “pump and dump” scheme. In this situation, a stockbroker advises his or her clients to invest in a stock in which he or she has an interest. This causes a rise in the market price of the stock, resulting in a bubble. The broker or a favored third party cashes out, netting a profit. Since the recommendations were not based upon any sound fundamentals, the bubble eventually collapses.

Identifying Stockbroker Fraud
Trading volume is rarely consistent over the long term. Volume will fluctuate with the client’s acceptable level of risk. A stockbroker for a risk-averse may make rare adjustments to blue-chip holdings and otherwise execute few trades. If the client is willing to accept a higher level of risk, the stockbroker may aggressively pursue markets that are more volatile. This can manifest as increased trading volume, which does not necessarily mean that the stockbroker is acting outside the client’s interests.

However, an unusually high volume of trades involving modest returns or even losses should alarm the investor. In these circumstances, the stockbroker may be churning, resulting in any gains for the investor disappearing in brokerage fees. If an investor is comfortable with a moderate or high level of risk and a moderate or high level of volume, he or she should discuss that with the broker before agreeing to such a trading strategy. If the broker begins executing seemingly random trades with little justification, the investor may be a victim of illegal churning.

Identifying a pump and dump scheme can be difficult as well. Small companies may issue stock that can be traded over-the-counter with a service called OTC Link, which is owned by OTC Markets Group, Inc. These small companies often do not provide financial reports to the Securities and Exchange Commission and are listed on the so-called “pink sheets” due to an inability to meet the listing requirements on a large national exchange. Their share prices are usually very low; many are called “penny stocks” for this reason.

The lack of reporting means that little information is available about some of these companies. Furthermore, the relatively small trading volume makes them extremely susceptible to market volatility, resulting in high profits for someone operating a pump and dump scheme. If a stockbroker recommends a company not listed on a major exchange like the New York Stock Exchange, the client should thoroughly research the company and ask the stockbroker for as much information about the issuer as possible.

Penny stocks are also an area of debate in some financial circles. Many small companies produce legitimate income and present real growth opportunities to investors; however, the volatile and unregulated nature of the market makes them risky investments. If the broker aggressively pushes for large investments in a stock not listed on a major exchange, insists upon immediate action, dissuades the client from alternative investments, and has little information available about the issuer, the client should avoid executing the trade, as the broker may be acting outside the client’s interests.

Reporting Stockbroker Fraud

If a victim feels that he or she was the victim of unlawful conduct by a stockbroker, he or she should contact the Securities and Exchange Commission (SEC). Among other things, the SEC regulates stockbrokers. The SEC has recovered over $2.6 billion in fines and penalties for investors through its enforcement actions and it has the power to bar stockbrokers from working in the financial sector, thus ensuring that a malicious stockbroker will not continue to defraud other investors. The SEC may also suspend trading of particular stock due to violations of securities laws.

Contacting an attorney is also prudent if one believes that he or she is the victim of fraud. Fraudulent misrepresentation is a tort involving the misrepresentation of a material fact in order to induce a detrimental reliance by the victim. If an expert misrepresents an opinion to a layperson, such as with a stockbroker extolling the virtues of a company in which he or she has an interest, his or her conduct may qualify as fraudulent. Injured parties should not count on government agencies bringing enforcement actions against white-collar criminals to compensate them for their injuries; settlements are more common than prison terms and massive fines. An experienced attorney can provide victimized investors with sound, practical advice on moving forward with a civil action.
Kelly Dennie is an investor and freelance writer. Page Perry LLC,stock broker fraud attorneys litigates against those brokers who breach their duties which violate legal rights. A broker is obligated to recommend those stocks that are practically believed to be suitable for a given investor with the investor’s investment objectives in mind. The agent must know and include in their investment strategy for the client the client’s level of risk tolerance, monetary condition and needs, tax status, other investments held, and all other pertinent information. Then, agent must act within legal bounds on behalf of the client.
Photo credit: http://www.flickr.com/photos/truthout/5946047509/

5 Tips To Save For Your First House Deposit

 Investing  Comments Off
Dec 132012
 

saIt’s little wonder it takes so long when a deposit of around 20% is needed and the average house price at approximately £160,000. That’s £32,000 first time buyers have to raise if they want to get onto the housing ladder; fees of up to £3,000 will make the job even harder.

Given the competing calls on all our incomes, just how can average first time buyer save the seemingly vast amount of money needed?

1. Save or invest? 

Simply put, saving involves using deposit accounts from banks and building societies, whereas investing means putting money in riskier assets in the hope of a better return. As a general rule of thumb, if you need the money in less than five years then savings is probably a better option, yes, you might miss a stock market rally, but at least you know your savings will be sheltered from any crashes. If you envisage it taking longer than five years to build up enough money to put down on your first house, you might consider investing, especially if you are putting money away each month

2. ISAs.

Getting a return on your savings is hard enough in the current climate and the better the return you get the quicker you will meet your goals of buying your own home. It therefore makes sense to save as tax efficiently as possible, after all, the less tax you pay, the more your savings or investments will grow.

Using an Individual Savings Account (ISA) is the place to start for tax efficient savings and investments, with each person being allowed to pay up to £11,280 into an ISA in the 2012/13 tax year.

3. Work your savings hard.

This might sound obvious but so few people actually do it. The better the rate of interest you get on your savings the less you will have to save and the quicker you will be able to buy your own house. Remember the golden rules of saving, take advantage of bonus rates, but remember when they come to an end, use tax efficient options such as ISAs, use longer term fixed rates bonds for better interest rates and scour the best buy tables for the most competitive interest rates

4. Mortgage incentives.

There are a number of different schemes aimed at helping first time buyers, including the NewBuy scheme. Check these out, if you qualify you might be able to get a higher loan to value mortgage meaning you won’t need to save for so long and you could get onto the housing ladder quicker than you thought

5. Parents.

Your parents could hold the key to you getting on the housing ladder sooner rather than later. Have they put money aside to help you? Would they be prepared to make a loan to you now to help fund your deposit? Would they act as a guarantor for your mortgage? All of these options and more are open to your parents and could help you buy your first house without having to wait eight years to save a large enough deposit

Getting on the housing ladder has never been harder. Since the credit crunch, banks and building societies are less willing to lend to people with smaller deposits and without a track record in repaying debt. The result is that ever larger deposits are needed by first time buyers, following our five top tips will help you cut the time it takes for you to save enough money to get you over the threshold of your first home.

Writing for Investment Sense, Phillip Bray looks at the how first time buyers can get the best savings interest rates, as well as offering other top tips, to help first time buyers save a large enough house deposit.

Savings Accounts that Work for You

 Business, Credit, Credit Cards, Debt, Financial, Investing, Jobs, Money, Savings  Comments Off
Nov 112012
 

Savings accounts are vital, especially in today’s world where unemployment is on the rise and employees as well as business owners face uncertain futures.  If you lose your job tomorrow, how will you pay your bills?  Do you have a safety net in place that will allow you to cover your monthly living expenses, your home, your healthcare, etc.?  If you do not have any savings in place to last you at least a few months if you end up losing your job and your income, you will face being foreclosed, being evicted, and getting into credit card debt.  Savings accounts are also necessary in the event that your checking account runs of out of enough funds and you need to transfer money from one account to another in order to pay off your credit card bills.

Standard Savings Accounts

Standard savings accounts are available at every bank, whether it is a brick and mortar bank or a strictly online bank.  Interest rates often accompany savings accounts, which means that, each month, you will earn a percentage of earnings on the amount of money you have invested into that savings account.

Most basic savings accounts do not offer very high interest rates, especially these days when interest rates have sunk so low that many banks do not even offer a full 1% on regular savings accounts.  You may, however, find a bank, such as a community bank rather than a big bank, which is able to provide you with higher interest earnings.

Also, some banks offer interest rates that go up as the balance in the account increases.  In this way, you are rewarded for investing in that bank, and as you continue adding to savings, you are increasing your interest rate at the same time, which means more monthly earnings.  This translates to your money growing with ease.

Certificates of Deposit

Certificates of deposit, or “CDs” for short, are able to offer you higher interest rates than standard savings accounts, but you need to be prepared to lock your money into that account for a specified amount of time, such as 3 months, 6 months, 9 months, or even a year or more.  Depending on how long you lock in your money, you will earn different interest rates, so it is entirely up to you to decide what you feel comfortable with.  If you feel that you will not need to access the money for a long time, then go for a longer term plan if it offers a higher interest rate that makes sense to you.  If, however, you are worried that you may need to access that money at some point, and you want to rest assured that it will be available to you sooner than later, go for the shortest possible term.  The reason for this is because you will pay a penalty fee if you need to take out the money before the CD has expired, or come to term.

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When you are ready to get a credit card, just remember that a line of credit comes with a lot of responsibility, so be sure to save up enough money in an emergency savings account, budget appropriately so that you do not end up overspending and so you do not end up in debt because you are unable to pay off those credit card bills.

How to Increase Your Yearly Profits with a Company Registered in Cyprus

 Business, Financial, Investing  Comments Off
Nov 112012
 

Every company’s goal is to earn as much as possible. This is a well known fact. Naturally, if you are  a company owner, your main goal is to earn as much and to spend as little as possible. With all the expenses you will have to pay for running a company, it is necessary that you find things you can spend less on, if possible.

One of the main expenses you will have to face when running a company is taxes. Taxes are pretty much fixed costs that you will have to deal with every year. You may not think that there are ways for you to be able to lessen it without committing a felony. However, there are actually ways that you can do so.

A great way for you to be able to reduce your taxes is by establishing your company in Cyprus. By doing this, you will be able to get all the advantages of a Cyprus based company – primarily regiarding to tax benefits.

Now, you may have noticed the title of this article and you may be wondering how exactly a Cyprus company and its taxation can increase your yearly profits. Well, it is quite simple. With Cypriot taxation laws, your Cyprus based company will be charged with less taxes. Obviously, less taxes means more revenue that you can be able to re invest for the development and growth of your company.

In short, your Cyprus company formation will greatly help you get more revenue anD less expenditures as time goes by. But, what are the things included in Cypriot taxation laws that will in effect cut your annual taxes? Here is a list of some of them.

  • Cyprus offers a low tax enviroment to build your company in.
  • Cyprus imposes only a fixed 10% corporate tax on Cyprus based companies.
  • Cyprus is a member of the European Union, making it subject to all the beneficial policies implemented by the EU.
  • There exists an advance ruling practice.
  • The taxable losses that you incur can be directly and indefinitely carried forward on future earnings to offset it.
  • The dividend income that is acquired from abroad is tax exempt.
  • Capital gain from an immovable property sale that is done abroad is tax exempt.
  • There are no strict transfer pricing rules that are followed.
  • Trading in securities is tax exempt.
  • Profits that are gleaned from buying and selling shares is tax exempt.

All of these and more are what you will be able to get if you make a wise decision and opt to build your company in Cyprus. You will find that doing so will actually be one of the best financial decisions that you have ever made. Aside from reducing the taxes you pay – which is a huge benefit in itself – you will also be able to access a whole new world of possibilities by taking the step to invest in Cyprus. 

Mary is the Accounts Department Manager at http://www.oxfordcy.com. She has a Computer Science Degree from the Central London Polytechnic with considerable experience and expertise in accounting and audit.

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