Once an investor has been bilked, Allen adds, the recourse often is less than satisfactory. Allen prefers the arbitration process for recovering funds, but changes are pending with the Securities and Exchange Commission to give investors fewer rights in arbitration. Class action suits, though much detested by corporations, sometimes benefit corporations more than they do investors. Again, says Allen, knowledge is the best, and perhaps only, defense. And finally, Allen explains, the greatest danger is thinking you know it all.
Nobody ever knows everything.
Rules and regulations are ever-changing, new products come on the market, and talented fraudmeisters continually find new ways to package old scams. Furthermore, a grasp of investment fundamentals is well within the capability of most of us. The possibility of fraud shouldn't discourage anyone from investing.