Unfortunately, fraud exists at every level of investment throughout the U.S. The SEC and FINRA (Financial Industry Regulatory Authority) are limited in their resources and the investment market is very broad. While a percentage of failure must be anticipated and expected when investing in early-stage companies, fraud involves malicious intent and therefore is less predictable. Micro-cap stocks have at times been a target for fraudsters due to the lack of available information about them and relatively poor liquidity. iSelect’s rigorous diligence process and the information it makes available to investors and their financial advisors, and the independent broker-dealer review that iSelect subjects each company to, attempts to reduce the risk of fraud. (See WHAT IS THE DUE DILIGENCE PROCESS?).
iSelect does not pay financial advisors. Any fees paid to financial advisors are solely determined by each financial advisor and investor. We also do not sell through offshore brokers. You select the financial advisor you want to work with. Most importantly, you select the companies you want to invest in. The decision is entirely yours.
Although iSelect’s in-depth review process and review procedures attempts to reduce the risk of fraud, intentional wrongdoing can never be eliminated altogether. Again, investors should share any concerns they may have with their financial advisors and ask them about the additional safeguards they can provide. And of course, investors and their financial advisors should utilize the information iSelect makes available to perform their own due diligence review.
*Read more at http://www.investopedia.com/articles/03/050803.asp#ixzz3WfTd69Gb