Some problems faced by financiers who invest in large projects in developing countries
Investors are persons or organizations who invest their money in different projects in order to have profit. Being an investor is a very big risk because you can never be sure 100% that you will have profit and will not lose your money.
While investing, there might appear some problems. One of them is misrepresentation which can occur when a broker purposefully makes untrue representations of material facts or omits material information. This can happen in any security in any account, but this problem is commonly found with low – priced, speculative securities because of their increased risk. As a result the investor loses money on investment and has trouble liquidating or selling it.
Another problem is high-pressure sales-calls that occur when an investor receives unsolicited or unwanted phone calls – using high-pressure, persistent tactics – soliciting the purchase of securities.
A suitability problem can involve any security and occurs when an investment made by a broker is inconsistent with the investor’s objectives and investing profile. For instance, the broker encourages an investor to purchase an investment that the broker wants versus an investment that may be best suited to the investor. Unauthorized trading is another problem which involves the purchase or sale of securities in a customer’s account without the customer’s prior knowledge and authorization. This can occur with any security. For example, the broker may believe a transaction is in the investor’s best interest but cannot or doesn’t contact the investor, and then makes the trade anyway. Or, the broker attempts to convince the investor of the benefits of the transactions in the hope that the investor ratifies trades after the fact.
As we can see, an investor may be faced with many problems but in order to avoid them he should investigate thoroughly any potential investment before he makes it, as well as the broker and securities firm that are recommending it to him. The investor should get to know the firm and the individual he is dealing with.