Investment Fraud and Securities Fraud
When an investor opens a brokerage account, the customer agreement requires any disputes to be resolved by arbitration at FINRA, which is a quasi-governmental agency which regulates brokerage firms. FINRA stands for Financial Industry Regulatory Authority, and is regulated by the SEC. Our FINRA arbitration lawyers work with investors to recover losses caused by securities fraud, investment fraud, Ponzi schemes, breach of fiduciary duty, unsuitable investments, and other kinds of stockbroker misconduct.
Silver Law Group is recognized as one of the best securities arbitration law firms in the country and Scott Silver, our managing partner, is regarded as an expert in FINRA arbitration. Our attorneys frequently lecture at law schools about securities arbitration and have written several legal articles about securities and investment fraud. The American Trial Lawyers Association published Scott Silver’s securities arbitration primer, which is used by law firms and others to help explain the securities arbitration process to lawyers and clients. With many years of combined experience, our attorneys have recovered millions of dollars for investors from Wall Street brokerage firms.
Stockbroker MisconductOur attorneys focus on representing investors in claims against brokerage firms, financial advisors, and stockbrokers who improperly manage an investors account or engage in gross misconduct and fraud. Our clients range from institutional investors involved in complex Ponzi schemes to many small retail investors who are victims of unsuitable advice.
Our law firm has represented plaintiffs in over a thousand FINRA arbitration claims and we have helped investors recover from some of the largest Ponzi schemes over the last twenty five years. We are sought out by other law firms around the country to co-counsel securities arbitration claims and one of the best awards our investment fraud attorneys receive is helping retirees get their retirement back on track. We handle many elder financial fraud cases against bad investment advisors and we work closely with our team of lawyers, forensic accountants, and support staff to maximize a client’s recovery through securities arbitration or FINRA.
Investment and Securities FraudInvestment and securities fraud arises out of allegations that losses are because of misconduct unrelated to market forces. Investment and securities fraud that is related to registered securities is governed by the Securities Exchange Commission (SEC). Investment/Securities fraud claims, or other claims for misrepresentations, may involve some aspects of fraud, deception, misrepresentation, non-disclosure, or omission of material facts related to the purchase or sale of a security. Our attorneys handle a variety of investment fraud cases including the sale of stocks, bonds, private placements, illiquid REITS, and other high risk or high commission products.
Growing Number of Securities Fraud CasesInvestment and securities fraud cases are only limited by Wall Street’s ability to find new and creative ways to take advantage of investors. Our lawyers have extensive experience in representing institutional and retail investors in actions involving claims for excessive trading or “churning,” unsuitable investment advice , breach of fiduciary duty , Ponzi schemes, selling away (i.e., when the product being offered by the registered representative has not been approved for sale by his/her firm), and other misconduct by financial advisors. Investment and securities fraud that is related to the sale of non-registered securities is given the appearance of legitimacy by the promoter of the investment/security through various methods to unwary or unsophisticated investors.
The Common Indicators of Stockbroker Misconduct or Investment FraudSecurities and investment fraud can take many different forms, but there are several universal signs that can indicate a scheme. Common red flags of an investment or securities fraud include:
- Illiquid Investments
- Real Estate Investments
- Private Placements
- Investment Guarantees of Principal or Interest
- Investment Sold Without Prospectus (unregistered)
- Unfamiliar Custodian of Funds
- Complex, Difficult to Understand Investment
- Advisor Without Any Credentials or Licenses
- Advisor Promotes “His Family Members” Invested
- Unexpected Contact by Phone or Email
- Pressure Sales Tactics
- Lack of due diligence
If you notice one or more of these signs of securities or investment fraud, be wary of investing your funds with that individual or stockbroker firm. And if you believe you’ve been the victim of a form of fraud, contact a reliable securities arbitration attorney as quickly as possible to work through your options.
Types of Investment and Securities FraudIn many instances, investment and securities fraud is perpetrated by individuals who have earned the investor’s confidence and owe the investor a fiduciary duty. Stockbrokers are regulated by the SEC and FINRA and must follow strict rules. Types of investment and securities fraud scams include:
- Ponzi Scheme
- “Pump and Dump” Penny Stock
- Precious Metals Fraud
- Pension Fraud
- Offshore Scams
- Pyramid Schemes
- Start-up Companies
- Private Placements
- Self-Directed IRAs
- Social Media and Securities Investing
A more in-depth look at several of these forms of investment and securities fraud reveals common traits amongst many investment frauds. You’ll find that some scams actually span categories, making it all the more important to be familiar with the various signs of deceit that indicate a fraudulent investment opportunity.
A Ponzi scheme is a common type of fraud where a new investor’s money is used to pay old investors. An investor in a Ponzi scheme believes they are getting a return on the business they invested in, but they’re actually getting another investor’s money.
Another common type of investment and securities fraud is the pump and dump stock scheme . This type of fraud works by generating increased trading, which inflates the price of a chosen stock. Once investors begin buying “hot” stock, and the price increases (the “pump” portion of the scheme), the instigators of the fraud sell their shares (the “dump”). This lowers the price of the stock and results in what can be massive losses for investors.
Along with the increase in the price of precious metals, such as gold, silver, and platinum, has come an increase in precious metal fraud . Con artists are taking advantage of the strong market for these materials to lure investors into false opportunities—promising them untold riches. It’s all too easy to be taken in by an attractive television ad, an online listing, or even a cold call. These fraudulent sales pitches will often claim that investors can triple their expenses with little or no risk. Unfortunately, if the opportunity sounds too good to be true, it most likely is.
Self-directed IRAs are yet another investment opportunity rife with con artists and fraudulent schemes. This type of IRA allows an individual to invest in options outside the approved mutual funds, stocks, bonds, and CDs typically allowed by regular IRAs. But while they provide an exciting opportunity for investments in assets like private placement securities , self-directed IRAs are more susceptible to fraudulent schemes and bad investments.
Social media platforms have vastly expanded our ability to communicate, but they’ve also opened the door for con artists to perpetrate fraud on a deeper level. Given the ease of creating a profile on sites like Twitter, Facebook, LinkedIn, and Instagram, scammers have no trouble finding and connecting with investors who seem like a likely target for their schemes.
An SEC receiver is frequently appointed to SEC cases for the benefit of investors to manage the affairs of a company that has been accused of securities or investment fraud or operating a Ponzi scheme. Silver Law Group frequently works as counsel for the receiver to help recover assets for the creditors. In other cases, we directly represent the investors and work in cooperation with an SEC receiver to help pursue claims against others who may be responsible or involved with the fraud, including claims against banks, accounting firms, auditors, and others.
Experienced Securities Fraud AttorneysSilver Law Group represents investors in securities and investment fraud cases on a contingency basis . Declining stock markets typically expose many fraudulent investment schemes as investors demand the withdrawal of their funds. Our lawyers are dedicated to representing investors in arbitration, state, and federal court. We have handled claims against every major financial institution and Wall Street firm that might have been involved in any way with investment and securities fraud, including UBS, Morgan Stanley, Merrill Lynch/Bank of America, and Wells Fargo. Our clients include large institutional investors and many small investors.
Depending on the circumstances of your investment, fraud can take a massive toll on your finances. If you believe you’ve been the victim of investment or securities fraud, contact Silver Law today. Our talented attorneys will put their years of experience to work recovering your losses. All inquiries are held in the strictest of confidence, and we do not share your information with anyone without your permission. We look forward to assisting you.
Additional Resources for Investors- Attorneys’ Fees in Securities Arbitration
- Potentially Fraudulent Investment Schemes on Radio Programs
- Prospectus or Offering Document
- Protection from Investment and Stockbroker Fraud
- Risk of Using Self-Directed IRAs
- Social Media and Securities Investing – Avoiding Investment Fraud
- Understanding Self-Directed IRA Fraud