By: Megan Makuck, Fall 2017 IAC Student Intern
Once upon a time, there was a little girl who lived in a village near the financial institutions. Whenever she went out, the little girl wore a red riding cloak, so everyone in the village called her Little Red Riding Hood.
One day, her mother having a little extra money, said to her, “Go, my dear, and see how your grandmother is doing, for I hear she is very ill. Take her this money, and tell her to put it towards her medical bills.” Little Red Riding Hood set out immediately to go to her grandmother’s house, who lived on the other side of the financial offices.
As she was going through the financial offices, she met an investment broker, who had a very great mind to take the money and invest it in high-fee products. He asked her where she was going. The poor child, who did not know that it was dangerous to stay and talk to this particular investment broker, said to him, “I am going to see my grandmother and carry her this money from mother to put towards her medical bills.”
“Does she live far off?” said the investment broker.
“It is two blocks past the tower ahead, second blue house on the left,” answered Little Red Riding Hood.
The two departed ways, and Little Red Riding Hood continued to grandma’s house.
The investment broker ran as fast as he could, taking the shortest path to get to grandma’s house much before Little Red Riding Hood. Upon arriving, he knocked on grandma’s door: tap, tap.
“Your grandchild, Little Red Riding Hood,” replied the investment broker, counterfeiting her voice; “who has brought you money sent by mother for your medical bills.”
Grandmother, who was too sick to leave her bed, cried out, “The door is unlocked, come right in.”
The investment broker opened the door and immediately scooped up all her money and sent her away in a taxi, for it had been more than three days since someone had given him money to invest. Then he shut the door and got into the grandmother’s bed, expecting Little Red Riding Hood, who came some time afterwards and knocked at the door: tap, tap.
Little Red Riding Hood, hearing the big voice of the investment broker, was at first afraid, but believing her grandmother had a cold and was hoarse, answered, “It is your grandchild Little Red Riding Hood, who has brought you money from mother to pay your medical bills.”
The investment broker cried out to her, softening his voice as much as he could, “The door is unlocked, come right in.”
Little Red Riding Hood opened the door and walked inside. She saw the investment broker, not realizing he was disguised as grandmother, “Grandmother, what big eyes you have.”
“All the better to see you with, my dear.”
“Grandmother, what big ears you have.”
“All the better to hear you with, my dear.”
“Grandmother, what deep pockets you have.”
“All the better to take your money, my dear.”
And, saying these words, the investment broker grabbed Little Red Riding Hood’s money and ran away.
Moral: While not all investment brokers are ill-intentioned, some can be very wolf-like. It is important to know who you share your personal financial information with and to do your due diligence before investing with any broker. To learn more about how to select your investment broker, visit the SEC.