Investment Practices to Avoid

Last updated: April 8, 2016

Invest Wisely & Avoid These Practices

*The information on this page is credited to IPT and Kiplinger. Their original materials are made available by the Kansas Securities here.

Unlicensed Activity

All brokerage firms, brokers and investment advisers who conduct business in Kansas must register with the Office of the Kansas Securities Commissioner, unless they meet conditions for an exemption. There are few specific lawful exemptions. Any unlicensed non-exempt activity is a violation of the Kansas Uniform Securities Act.

Unregistered Securities

Securities offered for sale in Kansas must be registered with the Office of the Kansas Securities Commissioner,unless exempt. It is a violation of the law to sell unregistered non-exempt securities in Kansas.

Unauthorized Trading

Only if investors give permission may a broker trade on their behalf.

Unsuitable Recommendations

Brokers must recommend what is suitable for their clients whereas investment advisers, as fiduciaries, must recommend what is best for the clients. They base this decision on your financial situation and investment goals.

Account Churning

A broker may not conduct excessive trading of an investor's account. This is an illegal practice. A broker would do it to generate commissions.

Untimely Trades

The law requires brokers to promptly execute investor orders.

Failure to Deliver

When an investor requests it, a broker or investment adviser must deliver securities. This must be done within a reasonable period of time.

Unauthorized Transfer of Assets

No funds or securities may be withdrawn from an investor’s account without his/her written authorization.

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