U.S. stocks, scam or not? Distinguish a fraudulent vs. a reputable stock broker

TutorialsJune 22, 2022

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The U.S. stock market is a large market with many excellent and transparent investment opportunities worldwide. Therefore, more and more investors are interested in learning how to trade and invest in U.S. stocks. However, there are more and more fraudulent securities brokers and international financial investment companies. This article learns about the recent forms of U.S. stock scams and how to identify a reputable broker.

Is investing in US stocks a scam or not?

The U.S. stock market is the largest in the world, with a history of hundreds of years, with the largest concentration of the world’s largest. Besides, this is also the place where securities investment and trading activities take place, which is considered stable, transparent, and brings many attractive opportunities for global investors. Referring of the most favorite stocks in the world, such as Apple, Facebook, Google, Tesla, etc., are all companies listed and traded on the U.S. stock exchanges. Therefore, investing in U.S. stocks is increasingly attracting investors. It is lame to compare the centennial U.S. stock market with emerging markets.

However, for citizens who do not live in the U.S., it is necessary to open a trading account through international stockbrokers to invest in U.S. stocks. It is a relatively common form of investment globally. However, not all stockbrokers are reputable. The task of investors is to know how to recognize the signs of fraud and choose reputable stockbrokers.

Current forms of U.S. securities fraud

Currently, there are two types of scams by U.S. stockbrokers as follows:

  • Investors are invited to open an account at a securities brokerage company and are instructed to deposit large amounts of money to invest in securities. The staff of these brokers often promise huge profits when investing according to their trading signals. The team of this stockbroker often instructs investors to use high leverage and ask for additional funds when the account is losing money. Gradually, investors lose more and more money.
  • Besides, some fraudulent securities brokerage companies often intentionally correct trading orders or increase spreads when investors make transactions. However, after a period of trading, if the investor is profitable, there is usually no withdrawal if the stockbroker is a scam company.
  • These forms of fraud are all performed by unscrupulous U.S. stockbrokers. The nature of the U.S. stock market is transparent and open. However, brokers in developing countries often scam this market, and investors do not have much experience.

Common signs of US stock scams

The stock brokerage company does not have a license to operate.

Reputable international financial management agencies manage companies operating in global securities. Some well-known and respected financial regulatory agencies in the world, such as the Financial Conduct Authority (FCA), the Cyprus Securities Exchange Commission (CySec), the Swiss Financial Market Regulatory Authority (FINMA), Australian Securities, and Investments Commission (ASIC), …

Investors can easily find information about the broker’s regulatory body on their official website. Then, investors need to look up the brokerage company’s name on the homepage of the regulatory agency they refer to. If reputable regulatory bodies do not regulate an international stockbroking firm, the broker may not be legit and lack transparency.

Things to know about the U.S. securities laws before trading

U.S. stockbroking company committed to investment returns

The stock market is always volatile and contains many opportunities but comes with significant risks. However, many brokers offer clients to open accounts by promising huge profits on trading deposits. These claims are unfounded and a sign of a stock market scam.

Besides advertising about transaction fees, transaction processing speed, trading platforms, various products, etc., Reputable stockbrokers often warn customers of risks besides investment opportunities in the market.

The broker does not allow clients to withdraw funds or has strict requirements.

Fraudulent stockbrokers often try to entice investors to deposit as much money into their accounts as possible. However, many investors detect abnormal signs after trading and want to withdraw cash but can’t do it. The reasons given by these brokers are usually: Detecting unusual transactions that need to be verified, the account does not have enough withdrawal limit, the system is suspended, or the withdrawal rate is high…

Unclear investment consulting services, inconsistent attitude.

One of the telltale signs of fraudulent U.S. stockbrokers is often the attitude of their advisors. When customers open an account and make a deposit, the employees of these companies often have the mindset to urge investors to deposit more money, commit, and promise huge profits. However, suppose customers do not intend to deposit more money or want to withdraw capital or stop trading. In that case, these consultants often change their attitude, causing difficulties for investors and even attacking and intimidating customers row. A reputable stockbroker usually does not use unprofessional staff and customer care processes. Therefore, when falling into this situation, investors should not add more money to their accounts as required to avoid losing more money.

In addition, when opening a securities investment account, investors should deposit a small amount of money to try trading for a while in advance. After making a profit, and making withdrawals convenient and stable for a long time, consider adding more investment capital to your account.

How do you recognize reputable U.S. stockbrokers?

Reputable regulatory bodies must regulate brokerage firms

To prevent brokers from cheating, there are trusted regulators around the world. List of countries with prestigious regulatory bodies in the world:

  • United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
  • United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
  • Australia: Australian Securities and Investment Commission (ASIC)
  • Switzerland – Switzerland: Swiss Federal Banking Commission (SFBC)
  • Germany – Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
  • France – France: Autorité des Marchés Financiers (AMF)
  • Canada: Autorité des Marches Financiers (AMF)

Deposit and withdrawal procedures

Brokers often offer easy deposit and withdrawal portals, allowing customers to pay themselves through a local bank or a popular e-wallet system. If a stockbroker only allows clients to deposit funds through an employee or a referrer, it could signify a lack of transparency.

Minimum balance and minimum trading volume.

A reputable U.S. stockbroker usually has low minimum balance requirements, usually only 5 USD to less than 200 USD for the first deposit. The minimum withdrawal requirement is only a few tens of USD for a one-time withdrawal.

Reputable brokers also offer different account types with low minimum trading volume requirements. It is one of the advantages of attracting customers to U.S. stockbrokers.

The low deposit and withdrawal requirements and low minimum trading volume help investors reduce the risks of using a new trading platform.

Accuracy when making transactions

A reputable U.S. stockbroker usually offers the same trading prices or spreads not too different from the market. If the price suggested by the broker is always much lower or higher than the market, it is a sign that the broker is dishonest.

Usually, each broker has prices that differ by a few percentage points, which is acceptable.

Some reputable U.S. stockbrokers today

Among the many stock brokers available today, investors have many options. Some brokers use their platforms, and others use the MT5 platform for their clients to trade stocks. Here are 3 U.S. stock brokers that are pretty familiar to global investors:

  1. Capital.com

Capital.com is a stockbroker that allows trading of up to 3600 share CFDs. CySEC, NBRB, and FCA regulate this broker. In particular, there are especially certificates of CySEC and FCA, which are prestigious licenses worldwide for securities companies.

Capital.com allows trading of CFD securities on its platform. Capital.com’s trading platform is quite beginner-friendly and easy to use.

Capital.com requires customers to deposit a minimum of only 20$ for traditional payment methods and 250$ for wire transfers. Minimum withdrawal requirements are only 30$. Deposit and withdrawal portals are pretty famous and make payments fast and easy.

Clients who buy unlevered shares on Capital.com have no swap fees or commissions on trading. In addition, customers also receive dividends when trading.

* See more: The complete guide Capital.com from a to z

Is investing in US stocks a scam or not? Some common US stock scam tricks. How to recognize and recommend some reputable brokers
  1. eToro

eToro is an international stockbroker that allows trading of more than 2400 different stocks. It is a broker recognized and supervised by reputable and strict organizations worldwide, such as CIF number HE20058, CySEC number 109/10, and FCA reference number 583263, operating and complying with the Directive. Financial Markets Market (MiFID)…

Customers trade stocks on eToro in custody and CFD. Therefore, when users buy shares on eToro without leverage, there will be no overnight fees and dividends like when buying actual shares.

eToro requires a minimum deposit of $200 on the first deposit and $50 or more on subsequent deposits. The payment gateways of eToro are also quite popular such as credit cards and e-wallets (PayPal, Skrill, Neteller, …). However, for some Asian countries, eToro does not have a local bank deposit channel, so it is pretty tricky for new users.

* See more: The complete guide eToro from a to z

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Is investing in US stocks a scam or not? Some common US stock scam tricks. How to recognize and recommend some reputable brokers
  1. XM

XM is a professional CFD broker that allows clients to trade CFD securities through the familiar MT5 platform. It is a reliable broker with FSC registration and is regulated by CySec, ASIC.

However, compared to the two brokers above, X.M. is more limited in the number of shares, with only 100 US stocks offered on the platform. However, for new traders, investing only in favorite stocks, this disadvantage does not affect.

X.M. has one more limitation with stock trading accounts than the other two brokers: a minimum deposit requirement of up to $10,000. It is a rather large amount, unsuitable for most new investors.

However, X.M. clients also receive dividends when they buy unlevered shares. In addition, X.M. also applies $0.04 per share and requires a minimum trade amount of $1 for U.S. stock trades.

XM is a professional broker, so deposit and withdrawal payment channels are diverse and convenient. Deposits and withdrawals are free for customers.

* See more: The complete guide XM from a to z


Investing in U.S. stocks always brings many opportunities to make good profits but also comes with risks. When participating in the market, investors need to be equipped with thorough trading knowledge and choose reputable brokers for trading. If you do not know about the U.S. stock market, you should not listen to the advice of unscrupulous stockbrokers.


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