Reciprocity: Red Flag of Fraud

By Patricia Uceda, Spring 2015 Graduate Research Assistant


FINRA has recently released a 90-second video informing investors about a very common red flag of fraud: reciprocity. Reciprocity is one of the main tactics that fraudsters use to con innocent investors. It essentially means doing something for someone in order to gain something in return.

Fraudsters will often utilize this concept by offering up “deals” to investors in the hopes that they will return the favor by investing. Examples include a sales pitch such as “Because you’re such a good friend… I’ll give you a big break on commission.” While this may seem like a good deal, don’t forget to do some investigation before you invest, such as checking if the broker-dealer is registered with FINRA, the SEC, or a state securities regulator.

Understanding these common fraud tactics can help you avoid becoming a victim. Visit for more tools and resources on fighting investment fraud.