Investment Advice and the Fraud Rules

Every day thousands of Americans are assaulted by mail, telephone, and personal contact with advice on how to invest their money for capital gains, often with dazzling reminders of the opportunity for great profits. If the advice is good, they may indeed one day have their treasure ship which will send their children to college or provide a round-the-world trip after retirement. If the advice is bad, they will of course learn by experience. But many of them will have to apply their lesson to a second inheritance or twenty years’ savings. The quality of investment advice is therefore a subject with serious human implications, and implications, too, for the health of a national economy which depends on investment by the masses. This article aims to tell something about who gives the advice, how it is formulated, and what legal controls govern its sincerity and competence.