What is Investment Fraud?

Investment fraud is when someone uses false or misleading information to convince others to sell or buy an investment. Recognizable scams like a Ponzi scheme are forms of investment fraud, but so are some actions by otherwise legitimate financial firms or their employees. If you’ve lost money because of misconduct rather than the ordinary ups and downs of the market, the chances are good that you’re a victim of investment fraud.

Depending on the circumstances, you may be able to bring the perpetrator to justice and recoup your investment. At Silver Law, we help clients hold perpetrators of investment fraud responsible for their actions through litigation, arbitration, SEC whistleblower claims, and more.

The definition of investment fraud is broad because there are a lot of different types of investment fraud. At the core, however, they all involve some kind of deceit or manipulation. They are also highly likely to lead to financial losses, which can be significant in some cases.

Common types of investment fraud include:

• Pyramid and Ponzi schemes
• Pre-IPO investment scams
• “Pump and dump” stocks
• Elder financial fraud
• “Churning”
• Advice not suitable for your situation
• “Selling away” investments not approved by the broker-dealer’s firm
• Overconcentration
• Conflicts of interest

Every situation is different, but the federal government advises investors to be cautious if they’re being offered promises of a guaranteed return or investments advertised as low-risk and high return. If a seller won’t disclose details or a financial company is headquartered offshore, a potential investor should be on guard. Fraudulent investment schemes may also rely on membership in an affinity group—someone who comes from the same age, religious, ethnic, national origin, or other group as the victims.

Investment fraud often breaks the law, which means the government may get involved once the fraud is revealed. There are multiple federal agencies that regulate different parts of the financial markets, and state laws might also apply. Those agencies may investigate and ultimately put the person who committed the fraud in prison or fine them for the wrongdoing.

But while these are essential parts of our financial regulatory system, they may not help ordinary investors. When the government gets involved in financial fraud, it’s protecting its interests—for example, making sure markets are fair—and not necessarily your interests. If you’d like to recover your money, you may need to take further action.

At Silver Law, we are dedicated to vindicating the rights of defrauded investors. Lead attorney Scott Silver has spent his entire career in securities law, switching early in his career from defending Wall Street firms accused of wrongdoing to defending investors. Today, he has recovered millions of dollars for those clients, routinely appears before financial regulators’ arbitration boards, and wrote an early primer on the SEC whistleblower program.

If you’ve been defrauded and you’d like to demand justice, don’t hesitate to call Silver Law. We offer free, confidential consultations, so there’s no risk in talking to us about your case. To set up a meeting, call us today at (800) 975-4345 or contact us through our website.