Investing always comes with some degree of risk. However, there is a great difference between losing money due to normal market fluctuations and being scammed out of your hard-earned savings or funds.
If you are seeing investment fraud red flags in your accounts and you have lost money, contacting an investment fraud lawyer can help hold bad brokers and brokerage firms accountable and help recover your stolen funds.
What is Investment Fraud?
Investment fraud takes many forms. Several people take advantage of family ties, existing friendships, or one party’s lack of knowledge about the markets in order to create a situation where money is committed unwisely. Investment scams usually involve convincing people to spend money on something that will not create the return that is promised.
Fraudulent investment schemes may involve a false situation, like offering shares in a company that does not exist. It also can involve false information, like convincing someone to invest in a company that is real, but not operating as successfully as described. Unfortunately, these types of investment fraud are very common and deceive even financially prudent investors.
Last year, investors lost $3.8 billion to scams, schemes, and deceptive trade practices, according to the Federal Trade Commission (FTC). Investment fraud is on the rise, with the 2022 loss more than double the $1.8 billion of 2021. False investment opportunities include fraudulent information on day trading, gold, gems, art, rare coins, seminars, webinars, real estate opportunities, and more.
Types of Investment Fraud
If you have lost money due to any of the following kinds of investment products or negligent financial advice, an investment fraud attorney can help you recover your losses:
- Unsuitable recommendations
- Breach of fiduciary duty
- Conflict of interest
- Stockbroker misrepresentation and omission of material facts
- Late-day trading, unauthorized trading, and churning
- Advance fee schemes, Ponzi schemes, and pyramid schemes
- Fraud such as hedge fund, high-yield investment, real estate, cryptocurrency, foreign currency, and social media/internet fraud
Investment Fraud: Red Flags
A common sign of potential investment fraud is someone who promises a sure bet. In 2022, investment fraud drained more money from consumers than fake sweepstakes offers, false job opportunities, and catfishing attempts combined.
It is important to understand the signs of investment fraud so you can catch it early and report it. Here are some common red flags of investment fraud or negligent fiduciary practices:
- There is unexpected activity or excessive trading in your accounts.
- Your fees have increased, either suddenly or without explanation.
- Your portfolio seems heavily invested, or “over-concentrated” in one stock or area.
- You are experiencing unexpected and substantial losses from your accounts.
- You notice unauthorized activity in your accounts.
- Errors are being made in records, financial statements, or during communications from your broker(s) and financial institution.
- Dates, account numbers, and amounts do not match up.
- Your broker offers to open a joint account with you, or asks to be named as a beneficiary in your accounts.
- Your broker recommends opportunities that are “sold away” from the firm, or take place outside of firm supervision.
- You discover misrepresentations about your investments, or learn details from other sources that contradict what you have been told.
- You have difficulty contacting your broker, and your calls and emails go unreturned.
- You have filed a complaint or asked to receive copies of paperwork—however, these are not being followed through.
What Should I Do if I Suspect Investment Fraud?
If you suspect fraud with your investment products, you might consider taking the following course of action:
- Gather evidence such as account statements, details of the broker or investment firm, and credit reports: When you suspect investment fraud, you should start keeping records of all important information. You will need to have access to relevant details surrounding your account information, broker’s contact information, credentials, credit reports, and more.
- Copy all relevant documents, like emails, text messages, and phone call transcripts: Keep a record of everything you have been told about the state of your investments. Print out transcripts of voicemails or copies of text messages where you were given information about your investments. Ensure you maintain records of everything possible—not just potentially suspicious records.
- Prepare a timeline of the events: When did you first suspect fraud? When was the last time you heard from your broker? What was the last official update you received from your financial institution? It is a good idea to prepare a timeline of all events from the start of your relationship with your advisor.
- Prepare a list of witnesses: Prepare a list of all the people who may be able to add valuable context and support to your claim. This may include other employees at the brokerage firm, other investors, or business partners.
- File a report with the police: Financial fraud is a crime. Filing a police report not only helps locate missing scammers, but also creates a useful paper trail for the prosecution.
- Contact an investment fraud lawyer: An investment fraud lawyer can guide you regarding all of the above, as well as take your case through the proper channels. Your attorney can help file a lawsuit for damages so you may recover your losses and ensure others do not fall prey to the same tactics in the future.
What Do Investment Fraud Lawyers Do?
Investment fraud attorneys are skilled legal advocates who specialize in helping those who have been taken advantage of by false investment opportunities.
The United States protects investors through several federal and state statutes. When brokers neglect their fiduciary duties and act outside of their client’s best interests, an investment fraud lawyer can help investigate the fraud and represent the interests of the injured person.
Do I Need an Investment Fraud Lawyer?
Securities laws and investment protection statutes are complex and varied. An investment fraud attorney can help guide you through the legal process to maximize your chances of recovering money.
Investment fraud attorneys do more than ensure that the law is upheld: Their priority is their client and ensuring their client’s rights are protected above all else. Federal investigators, on the other hand, care most about unraveling the fraud and holding bad actors accountable. This makes investment fraud attorneys and their highly specialized legal expertise a powerful weapon to have in your arsenal when you have been defrauded.
How Can an Investment Fraud Lawyer Help Me?
When you approach an investment fraud lawyer, they will first seek to understand the background and main issues surrounding your case through asking you a series of questions. Once this is done, they will thoroughly examine all relevant paperwork and analyze the corresponding law. Such paperwork may include consultancy agreements, financial statements, text and email exchanges, fiduciary agreements, and fee schedules.
After comprehensive research, your investment fraud lawyer will then prepare a list of legal issues, along with the facts and law in support of your case. They will also look for ways to grant you the relief you seek as well as help mitigate your losses. A good investment fraud lawyer will also be ready with all counter-defenses that may arise in a dispute, and will be skillful at handling tough negotiations with opposing parties.
Investment Fraud Lawyer: What to Look For
The following are some important areas to look for when choosing the appropriate team of investment fraud attorneys to represent your interests:
- Background in investment fraud cases: FINRA arbitration is a specialized field, so you must pick the right attorney. Your investment fraud law firm should have a background in handling a variety of investment fraud cases, as well as experience in your specific kind of legal situation.
- Experience in handling trials and other forums: Your securities and investment fraud lawsuit may involve a hearing in front of FINRA, or a courtroom. Your attorney should be fully qualified to represent you in every area necessary, as well as have aggressive trial and negotiation experience to handle any challenge that may arise.
- Personalized attention to each client: Most investment fraud claims involve clients who have already been betrayed by one professional that they trusted to serve their financial goals. The last thing you need is an investment fraud attorney who fails to give appropriate advice, skims through your paperwork, or fails to deliver in court. A good investment fraud attorney should give personalized attention to each of their clients, and ensure that they have adequate firm resources dedicated to research, preparation, communication, and follow through.
- Client testimonials and reviews: Finally, you need an investment fraud law firm with a proven track record of success. Ask for client testimonials or reviews in order to ensure that others who chose to work with the attorney or firm have felt satisfied with their attorney’s work.
When to Hire an Investment Fraud Lawyer: FAQs
1. What is the difference between a securities fraud lawyer and an investment fraud lawyer?
Both securities fraud lawyers and investment fraud lawyers protect investors’ interests, but often handle different areas of financial crime. A securities fraud lawyer primarily handles cases that involve manipulation in the markets such as insider trading, pump-and-dump schemes, false statements made to investors, and more.
Investment fraud lawyers, on the other hand, primarily represent clients who have been deceived, misled, or subjected to negligent action by brokers or financial advisors.
2. How long does it take to resolve an investment fraud case?
How long it takes to resolve an investment fraud case depends on the facts of the case; the number of investors who have been defrauded; the amount embezzled, stolen, or lost; and the quality of your legal representation.
3. How to avoid investment scams?
To avoid being scammed, you should stay up to date on common scams and warning signs reported to the FTC. Always ask to see documentation for real estate opportunities, cryptocurrency, and investment opportunities. Be wary of high-pressure sales tactics or secret methods to make money fast. When an opportunity seems too good to be true, it usually is.
4. What are the alternative dispute resolution options available for investment fraud cases?
Arbitration and mediation are two options that circumvent going to court in order to resolve a fraud claim. These options can greatly reduce the amount of time spent in attempting to recover funds from your claim, and still ensure that the matter gets settled fairly.
5. What is FINRA?
FINRA is a regulatory board of the United States Securities and Exchange Commission. FINRA is dedicated to ensuring that brokers and firms comply with federal law as well as ethics rules. It helps arbitrate claims involving misrepresentation, unauthorized trades, unsuitable financial recommendations, failure to diversify, failure to supervise, and other kinds of negligent actions from brokers.
6. How does an investment fraud lawyer help with a FINRA arbitration?
An investment fraud lawyer is an expert in the field of investment ethics and the code of law who is dedicated to upholding your best interests during the FINRA arbitration process. They will prepare your claim, assemble your paperwork, support your case with legal references, examples, and relevant case law, negotiate with the other side, and ensure you do not settle for less than you deserve.
7. What is the punishment for investment fraud?
Securities and investment fraud are punishable by significant fines, and in some instances, by federal imprisonment.
Contact an Investment Fraud Lawyer Today
Being misled about your investments does not have to be the end of the story. Professional legal advice can aid you in recovering funds and ensuring your future investments are appropriately protected.
If you need help recovering stolen funds, preventing further losses, and ensuring that your best interests are centered during a FINRA arbitration lawsuit, contact an investment fraud attorney for help.