A Securities Fraud Attorney Can Help
Securities fraud can take many forms. Knowing what to watch for as an individual investor can help mitigate your risk. However, you can never protect yourself entirely, and, as a result, it is important to know what to do if you suffer fraudulent losses as well. Should the worst happen, a securities fraud legal practitioner at Zamansky, LLC is here to help.
We all know that investing is the key to retirement. For many people, investing is also a way to earn passive income鈥攅ither as a supplement to their regular earnings or as a pathway to financial freedom. But, while there are many benefits to investing wisely, investing also involves risks鈥攁nd this includes the risk of falling victim to securities fraud.
There are inherent risks to investing in securities. No one can predict the market with absolute certainty, and this means that investing is inherently speculative. But, while certain risks are considered acceptable (subject to an individual鈥檚 personal risk tolerance, financial circumstances, and investment strategy), one risk that is never acceptable is the risk of fraud.
Securities fraud is a broad term encompassing the illegal actions of just about anyone in the complex structure that makes up the financial industry. From misselling and misrepresentation to insider trading and a variety of fraudulent investment schemes, plus many more examples besides, there are many potential ways for investors to be caught out and misled.
Fortunately, many finance professionals are fully aware of the regulations surrounding their activities and are committed to acting appropriately. However, whether through negligence or intent, there is also always a chance that their actions not only become illegal but also result in substantial losses for their clients.
If you have suffered investment losses and you believe they resulted not from natural market movements but unethical or illegal practices, you should contact a securities fraud lawyer.
What is Securities Fraud?
Securities fraud can take many different forms, and It is unfortunate that it exists at all, but the widespread and diverse nature of this type of fraud means that individual investors face risks at virtually all stages of investing. For instance, our experienced securities fraud attorneys have successfully handled cases involving entities that committed securities fraud.
- Publicly-Traded Companies 鈥 Publicly-traded companies withhold material information from investors, misrepresenting information or delaying the release of unfavorable news.
- Private Companies 鈥 Private companies make unregistered securities offerings in violation of federal law.
- Company Owners, Executives and Managers 鈥 Company owners, executives, and managers engage in insider trading, misappropriating funds, concealing fraudulent acts, and misrepresenting information to the company鈥檚 accountants and lawyers.
- Stockbrokers and Brokerage Firms 鈥 Stockbrokers and brokerage firms withhold or misrepresent material information, engage in unauthorized transactions, charge excessive fees, and make trades that do not serve their customers鈥 best interests.
- Investment Advisors and Advisory Firms 鈥 Investment advisors and advisory firms withhold or misrepresent material information, make unsuitable investment recommendations, overconcentrate investors鈥 portfolios, and engage in various other forms of fraudulent conduct.
- Athletes, Celebrities, Influencers, and Community Members 鈥 Individuals not directly involved in the securities market make misrepresentations, omit material information, fail to disclose financial incentives, and use their influence to convince people to make risky investments or invest in fraudulent scams.
- Scam Artists 鈥 Scam artists misrepresent themselves as registered brokers or advisors, run 鈥渂oiler rooms,鈥 fabricate investment products, and use high-pressure tactics to misappropriate investors鈥 hard-earned funds.
As an individual investor, you trust professionals and securities industry regulators to help keep you safe. Unfortunately, there is only so much these individuals can do, and, in some cases (in fact, in many cases), investment professionals do not have their customers鈥 best interests in mind. For this reason, no matter how careful they are, individual investors should review their account statements regularly, and they should consult with a securities fraud litigation lawyer if they have any concerns about suspicious activity or seemingly unexplained losses.
FBI: Investors Need to Be On the Lookout for These Forms of Securities Fraud
Several agencies enforce investor protections at the state and federal levels. One of these agencies is the Federal Bureau of Investigation (FBI). The FBI investigates allegations of securities fraud, and it works with the U.S. Department of Justice (DOJ) to prosecute individuals and companies suspected of defrauding individual investors.
The FBI has within the broad securities fraud arena. For example, the FBI is mainly focused on investigating cases involving:
High-Yield Investment Fraud
High-yield investment fraud is characterized by promises of high rates of return with little or no risk.鈥 Despite the inherent volatility of the securities market, some brokers, advisors, and scam artists try to convince investors that they can find 鈥渃an鈥檛 miss鈥 investment opportunities鈥攁nd they are often successful in doing so. Many investors fall victim to aggressive and high-pressure sales tactics, and they end up making rushed decisions that they would not have made under ordinary circumstances.
Ponzi Schemes and Pyramid Schemes
Ponzi schemes and pyramid schemes involve using investors鈥 money to pay fraudulent 鈥渞eturns鈥 to previous investors. While these schemes will often appear to be legitimate investment opportunities (and scam artists are becoming increasingly sophisticated), there are still several red flags as well.
Advanced Fee Schemes
Advanced fee schemes are similar to high-yield investment fraud and Ponzi schemes in that they often involve high-pressure sales tactics, but the difference is that investors鈥 funds are usually deposited directly into the scam artists鈥 pockets. Investors are typically pressured into making a relatively small investment with the promise of substantial returns, and then they typically never hear from the supposed 鈥渂roker鈥 again.
Broker Embezzlement
In addition to fraud perpetrated by individuals posing as brokers, securities fraud committed by registered brokers is a genuine concern for individual investors as well. While stockbroker fraud can take many forms, the FBI focuses primarily on cases involving the embezzlement of funds from investors鈥 brokerage accounts.
Hedge Fund Fraud
Hedge funds pool investors鈥 money to pursue complex (and often high-risk) investment strategies. While some hedge funds prove to be extremely profitable, the risks involved mean that investing in a hedge fund is unsuitable for most individual investors. Failing to disclose risks, charging excessive fees, and other fraudulent alternative investments often lead to substantial losses for hedge fund investors.
SEC: Investors Need to Be Wary of These Forms of Securities Fraud as Well
The U.S. Securities and Exchange Commission (SEC) is the federal agency with primary responsibility for overseeing the securities market in the United States. It pursues enforcement actions against companies, brokerage firms, and investment advisors as well, and it works as diligently as it can to protect investors from fraud.
The SEC鈥檚 website provides a wealth of resources for individual investors. For example, its 鈥 published in 2009 but still very relevant today 鈥 highlights the risk of financial misconduct, including:
1. Affinity Fraud
Affinity fraud involves individuals using positions of trust and authority to perpetrate securities fraud scams against people who are close to them. It is a particular risk for older investors, who may have long-standing relationships with individuals who choose to perpetrate fraudulent schemes and who may be more susceptible to relying on the information they are provided.
2. Internet Fraud
If Internet fraud was a concern back in 2009, you can imagine how big of a concern it is today. From email scams and fake websites to fraudulent social media endorsements, Internet fraud is among the most significant securities fraud risks for individual investors.
3. Cold Calling and 鈥漃ump and Dump鈥 Schemes
While most people know of cold calling and 鈥減ump and dump鈥 schemes from Hollywood movies, these are real scams that result in real losses for real investors. Individual investors need to be extremely wary of any unsolicited investment offers, and they should do their own careful research before investing.
4. Microcap Stock Fraud
Microcap stocks (or 鈥減enny stocks鈥) have always presented challenges for regulators, and today many apps and websites promote these investments as having 鈥渓ow barriers to entry鈥 for people who are interested in dipping their toes into the stock market. However, the microcap market presents a high risk for fraud, and many investors end up suffering substantial losses.
5. Broker and Advisor Fraud
While many brokers and advisors act in their clients鈥 best interests, some do not. From making unauthorized trades (to generate commissions) to only sharing the information they want their clients to know, brokers and advisors can commit securities fraud in many different ways. These financial experts at local, national and global firms routinely face scrutiny for financial dishonesty, and each year numerous investors are forced to file claims to recover fraudulent investment losses.
How Can A Securities Attorney Prove That an Investor is a Victim of Securities Fraud?
Recovering fraudulent investment losses begins with proving that you are a victim of securities fraud. This requires proof of five key 鈥渆lements鈥:
Fraudulent Conduct
Your attorney must be able to prove that a company, firm, fund or individual committed a fraudulent act. This could be anything from withholding material information to conducting unauthorized trades.
Intent
Generally speaking, an inadvertent mistake is not enough to give rise to a claim for fraud, nor is providing sound advice that ends up leading to market losses. In order to establish a claim for securities fraud, it is necessary to prove that the act or omission in question was committed with intent.
Reliance
Even if a company made a material omission or your advisor had a conflict of interest (which resulted in a breach of his or her fiduciary duty), you are not a victim if you did not rely on the omission or advice in question. But, if you did rely, then you may have a claim.
Damages
You must also be able to prove that you suffered damages. These are your fraudulent investment losses; and, while this is generally the easiest element to prove, you must still be able to clearly identify which of your investment losses are the result of the fraud in question.
Causation
Finally, your securities fraud attorney must be able to prove that your reliance on the fraudulent act or omission in question caused your damages. If your losses were the result of ordinary market factors that simply coincided with fraudulent conduct, this alone is not enough to establish a claim for securities fraud.
Why You Need a Securities Fraud Attorney
If you believe that you may be a victim of fraud, what should you do? While you can report the fraud to the FBI or the SEC, it will also be important for you to consult with a securities fraud litigation legal expert. While federal authorities can put a stop to the fraudulent conduct and pursue charges to punish bad actors, to recover your losses, an experienced securities attorney will assist with filing a claim of your own.
In many cases, recovering fraudulent investment losses involves pursuing a claim in FINRA arbitration. The Financial Industry Regulatory Authority (FINRA) is the SEC鈥檚 partner in policing the U.S. securities market, and its arbitration forum provides a venue for individual investors to recover fraudulent losses without going to court. Acting quickly can help to improve your chances of recovering your losses.
The Benefits of Speaking to an Experienced Securities Attorney
As noted, it can take months or years for official confirmation that securities fraud has taken place. Bernie Madoff is responsible for making Ponzi schemes widely known outside the securities industry. He was first arrested in December 2008, while questions over the viability of his firm and its actions were first raised in 1999. Even then, the scheme only truly unraveled when Madoff鈥檚 sons alerted authorities.
This illustrates the importance of paying attention to your investments, even if you trust the investment advice you receive and the investment advisers that give it. Something as simple as browsing an annual statement over a coffee for signs of inconsistencies and monitoring investment activity for churning can be the difference between a financial recovery and significant financial loss.
If you believe something may not be as it seems, and even if you do not necessarily have solid proof of anything, it is worth consulting a securities fraud attorney.
They can help cast a critical eye over accounts and advise clients of any potential claims. They can also draw on their significant experience. Securities fraud occurs in many different ways, with just some of them outlined above. An experienced lawyer will be aware of industry rules and how they apply to your financial situation and can apply a different perspective to your suspicions.
A securities defense attorney will also have broader insight that may apply to your case. From rumblings on Wall Street to multiple individual investors leveling accusations at the same financial adviser or brokerage firm, robust connections throughout the financial services industry can help protect any investment in a timely manner.
What is the Statute of Limitations?
The statute of limitations for securities fraud claims depends on whether you are seeking to recover your losses in court or through FINRA arbitration. In court, most claims are subject to a limitation period of two years from the date of discovery, subject to a maximum of five years from the date of the fraudulent act or omission. For FINRA arbitration claims, the statute of limitations is six years from the date of the fraudulent act or omission.
Speak To a Securities Fraud Attorney from AV短视频
No matter what form it takes, securities fraud is illegal. As such, a highly-regarded law firm with a reputation for getting clients what they deserve should be your first port of call. If you鈥檙e in Florida, we firmly believe that there is no better choice than AV短视频.
With an office in the heart of Miami and another on Wall Street, we combine the personal touch with daily exposure to the latest developments and trends in the financial sector. We back that with decades of combined experience in securities litigation and underpin our commitment to clients by taking the vast majority of cases on a contingency basis.
Whether you suspect foul play or have lost money on an investment for reasons that have already made the news and are ready to take action, we鈥檙e standing by to help. Call the AV短视频 offices now for a free consultation at听866-502-9313.
How Do I Report Securities Fraud?
There are three primary ways to report securities fraud in the U.S. Whichever option you choose, you will want to act promptly, as this will help increase the chances of the defrauding company, firm or individual being held accountable.
1. Report the Fraud to the SEC
The first option is to report the fraud to the SEC. The SEC is the federal agency that is responsible for overseeing the securities markets in the U.S. and enforcing the nation鈥檚 securities laws. It regularly investigates companies, firms and individuals suspected of defrauding investors, and it relies heavily on members of the public to come forward with information it can use to launch investigations.
In order to report securities fraud to the SEC, you must complete and submit the agency鈥檚 Tips, Complaints and Referrals (TCR) form. You can either print the form and mail (or fax) it to the SEC or use the agency鈥檚 .
When reporting to the SEC, 鈥測ou are not required to furnish any more information than you wish or possess.鈥 However, the SEC that you minimally include the following:
- Your name and contact information (unless you are submitting a tip anonymously);
- The name and contact information of any individual or company you reference in your report;
- A detailed description of the fraud (鈥渋ncluding who was involved in the conduct and how, why and when the conduct occurred鈥); and,听
- Copies of any relevant documentation you have in your possession.
If you have information about securities fraud of which the SEC is currently unaware, you may qualify as a whistleblower. Whistleblowers are entitled to certain protections, and they can also receive financial awards if they supply information that leads to successful enforcement action. In order to claim whistleblower status, you must answer 鈥淵es鈥 to the question, 鈥淎re you filing this tip under the SEC鈥檚 whistleblower program?鈥 on the TCR form, and you must complete the Whistleblower Declaration at the end of the form as well.
2. Reporting Securities Fraud to Another State or Federal Agency
The second option is to report the fraud to another state or federal agency. The Employee Benefits Security Administration (EBSA), state attorney general鈥檚 offices, and local police departments all accept reports of securities fraud in appropriate cases. The EBSA handles complaints under the Employee Retirement Income Security Act (ERISA), state attorney general鈥檚 offices handle complaints under state securities laws, and local police departments handle certain cases involving embezzlement, theft and other crimes.
When reporting to one of these agencies, it is a good idea to confirm that the agency will accept your report鈥攁s each one only handles limited types of cases. You should also make sure that you are providing all of the information required in order for the agency to evaluate your complaint and determine whether to initiate an investigation.听听
3. Hire a Top-Rated Securities Fraud Attorney to Help You Report the Fraud
The third option is to hire a securities attorney to help you report the fraud. You can do this at no cost. When you hire a securities fraud attorney, your attorney will review your information and determine where it should be sent. Your legal practitioner can also report the fraud to the SEC or other appropriate agency on your behalf. If you wish to submit a whistleblower complaint to the SEC anonymously, you are required to hire an attorney and include your attorney鈥檚 contact information on your TCR form in order to be eligible for a financial award.
If you are a victim of securities fraud, a skilled legal authority may also be able to pursue a claim for financial recovery on your behalf. Federal securities laws give investors the right to pursue fraud claims against companies, brokerage and advisory firms, and individual brokers and advisors. While some claims will need to be filed in federal district court, many claims are eligible for FINRA arbitration.
In order to help you decide if you are ready to pursue a claim with an attorney, the infographic below outlines the securities arbitration process:
What Does It Take to Prove Securities Fraud?
Pursuing a successful securities fraud claim in arbitration requires more than just proof of loss. To recover damages for fraud, you must be able to prove that your losses resulted from a broker鈥檚, firm鈥檚 or company鈥檚 fraudulent misrepresentations or omissions. While your account statements are important evidence, they are just one of many forms of evidence your听attorney will need to recover just compensation on your behalf.
When you hire a skilled securities fraud attorney at AV短视频 to represent you, they will work with you to collect any other forms of evidence you may have in your possession. These could include prospectuses, emails, other communications, and various other forms of documentation. Your attorney will also examine all relevant public sources of evidence (such as the SEC鈥檚 EDGAR database and all pertinent social media profiles), and your lawyer will be able to gather additional evidence through the discovery process in arbitration. Depending on the circumstances, this may include evidence such as:
- Internal memos and communications
- Communications with lenders, funding sources and other third parties
- Draft prospectuses and other draft documents
- Other key internal documents
- Sworn testimony from firm or company representatives
Reporting to the SEC Isn’t Enough
As we discussed above, if you believe you are a victim of securities fraud, one option you have is to report the fraud to the SEC or your state鈥檚 securities regulator. But, while this is an option that you have available, it is important to understand that reporting your loss to the SEC isn鈥檛 enough to protect your legal rights.
While the SEC will secure restitution for fraud victims in some cases, there is no guarantee that this will happen. The SEC regularly settles fraud allegations, and settlements may or may not include compensation for victims. Additionally, even if the SEC issues a restitution order, there is only a very small chance (at best) that this will result in you receiving the full damages to which you are legally entitled. Finally, any restitution you receive may not come until months, or even years, down the line.
With this in mind, even if you report the fraud to the SEC, you should still hire a securities lawyer to represent you. Your securities fraud attorney can pursue your claim in arbitration, and your lawyer can seek full compensation based on your specific losses. Using the evidence your attorney gathers during the arbitration process, he or she will be able to demonstrate your actual losses from the fraud, and any settlement (which will be subject to your approval) will reflect your best interests under the circumstances at hand.
Penalties and Remedies Available in Securities Fraud Cases
Securities fraud is a crime under U.S. federal law. State laws criminalize securities fraud as well; and, even when stockbrokers and investment advisors are not criminally culpable, they can face civil or administrative penalties imposed by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). But, while the penalties for securities fraud can be substantial, enforcement actions generally do not result in financial recoveries for investors.
Instead, to recover their fraudulent investment losses, investors must engage a securities lawyer to enforce their legal rights on their behalf. In most cases, this involves filing for FINRA arbitration鈥攖hough litigating in federal court will be necessary in some cases. While arbitration and litigation are very different means of enforcement (and are options in different circumstances), both provide defrauded investors with access to similar remedies.
Understanding the Penalties for Securities Fraud
Stockbrokers and investment advisors can face substantial penalties in federal enforcement cases. Depending on the circumstances involved, accusations of securities fraud can expose brokers and advisors to consequences including:
- Substantial fines and restitution
- Federal or state imprisonment
- Injunctions against engaging in prohibited conduct
- Affirmative obligations to implement compliance policies and procedures
- Registration suspension or revocation
The U.S. Department of Justice (DOJ) is responsible for prosecuting federal criminal securities fraud cases. In doing so, it often works closely with the SEC and FINRA, both of which may pursue civil or administrative penalties in parallel with a criminal prosecution. While the DOJ can鈥攁nd does鈥攑ursue securities fraud cases in a wide range of circumstances, it frequently prioritizes cases involving widespread fraud affecting large numbers of investors.
Understanding the Remedies for Securities Fraud
Since federal and state authorities do not pursue all cases of securities fraud鈥攁nd since criminal, civil and administrative enforcement actions do not provide full compensation to defrauded investors鈥攊t is up to investors to enforce their legal rights when necessary. While the DOJ or SEC may secure restitution in some cases, restitution awards generally do not cover all of the damages that investors can seek to recover on their own. When pursuing FINRA arbitration or securities fraud litigation, defrauded investors can seek to fully recover their:
- Loss of principal
- Loss of investment gains
- Opportunity costs
- Other financial losses
- Attorneys鈥 fees and costs (in appropriate cases)
Defrauded investors can seek punitive damages in some cases as well. But, in all cases, taking action promptly is essential for maximizing investors鈥 chances of successfully pursuing enforcement. With this in mind, if you believe that you may be a victim of securities fraud, you should consult with a lawyer as soon as possible.
Speak with a Securities Fraud Attorney in Confidence
Do you have a securities fraud claim against a broker, firm or company? If so, we can use our experience to help you recover your losses in FINRA arbitration. To discuss your claim with a securities fraud attorney at AV短视频 in confidence, call or request a complimentary consultation online now.