How to recover losses by retaining an investment fraud lawyer
If you have ever used a broker or brokerage firm to manage your investments, you know how important it is that your funds are invested appropriately.
As investors and clients of the broker or firm that we choose to work with, we expect that the people with whom we entrust our hard-earned money will invest it carefully and in our best interest.
Unfortunately, however, this isn’t always the case.
In fact, according to a 2019 United States Sentencing Commission report, securities and investment fraud has increased by 13.3% since fiscal year 2015.
If you have ever been the victim of investment fraud, you know how devastating it can be. It can feel like you’ve lost everything.
But don’t give up hope quite yet. Know that there are ways that you can recover from your investment fraud losses and get back on track.
Investment Fraud: An Overview
You’ve probably heard the term “investment fraud” before. You probably also know that investment fraud isn’t something you want to be tied up in. But what exactly is it?
Let’s take a closer look at what investment fraud is before we dive into how you can recover your losses.
What Even Is Investment Fraud?
Investment fraud is more common than you might think. It is also commonly referred to as stock fraud, securities fraud, or broker fraud.
Investment fraud is a type of white-collar crime that at its core involves the misrepresentation or mismanagement of investment funds.
Examples of Investment Fraud
Investment fraud can be difficult to identify if you don’t know what you’re looking for.
Ponzi or pyramid schemes are common examples of investment fraud. However, these aren’t the only examples. Investment fraud comes in all shapes and sizes, and sometimes, the signs of investment fraud can be much more subtle.
Below are some signs of potential investment fraud:
Promises of high returns with no risk,
Requests for an “advance fee,”
Unauthorized trading,
Offshore investments,
Unsuitable investments being made for your particular circumstances, and
No clear, written information about the details and risks of investment provided by a broker or firm.
While these aren’t the only signs to look out for, they are a good place to start. If something feels off, speak with a professional to discuss whether you might be a victim of investment fraud.
Who Can Be Responsible for Investment Fraud
Internet scammers can be responsible for investment fraud. Frequently, however, perpetrators of investment fraud are the very people that should have known how to manage your investments: brokers and brokerage firms.
When you hire a professional to invest your funds, they have a duty to do so in your best interest. If that broker or firm breaches their duty and keeps you in the dark about your investments or mismanages your funds in a way that results in monetary losses, they can be liable for investment fraud.
As one investment fraud lawyer puts it, “Your relationship with your financial advisor should be ongoing, transparent, and trusting. If your advisor fails to provide you with consistent, sufficient, and accurate information,” something may not be right.
How to Avoid Being a Victim of Investment Fraud
A good rule of thumb is if it sounds too good to be true, then it probably is.
Don’t believe anyone who tells you that they can promise you a fantastic investment opportunity with no risk. Investing is inherently risky, and the markets are always volatile. Anyone who tells you otherwise is not looking out for you and your best interests.
One simple but great way to spot a potential investment fraud scam is to check credentials.
Investment professionals are required to register with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), or your local state regulator. FINRA offers a free online tool, BrokerCheck, to help you view credentials, investment-related licensing information, regulatory actions, and other valuable information about potential brokers and investment advisors.
Here are some other things you can do to try to avoid falling victim to investment fraud:
Don’t be pressured to move forward with an investment on the spot if you don’t feel comfortable doing so;
Treat online investment advertisements or opportunities with skepticism;
Research any potential investment offerings;
Don’t be afraid to ask for more detailed information about the risks, costs, and rewards of potential investments; and
Discuss any questions or concerns you may have with an unbiased and independent third-party.
By taking these steps, you can reduce your risk of ever being involved in an investment fraud case in the first place.
What Should I Do If I Think I Might Be a Victim of Investment Fraud
Unfortunately, you can’t always prevent someone else’s fraudulent actions. So what do you do if you did everything in your power but still fell victim to investment fraud?
While you might feel like there’s nothing you can do, this isn’t the case at all. In fact, there are ways for you to recover your losses and hold the fraudulent party accountable.
If you have suffered investment losses at the hands of someone else, take these steps to begin the process toward recovery:
Create a detailed file with any information you have regarding your investments, losses, and the broker or brokerage firm you worked with;
Research resources for victims of investment fraud;
Report the fraud to the applicable regulatory agencies; and
Contact an investment fraud lawyer who can help you navigate the process of where to go from here.
Parties who commit investment fraud can be charged criminally, but they can also be held civilly liable. And a civil claim for investment fraud can help you get justice as well as recover the money that you lost.