What is Securities Fraud and Have I Been a Victim?
Securities fraud includes a wide range of illegal activities centered around the misrepresentation or omission of information an investor would reasonably want to know and consider before making an investment decision regarding whether to buy, sell, or hold a security.
Unsophisticated and elderly investors are particularly vulnerable to fraud and misrepresentation. Fraud can manifest itself in many ways, including but not limited to the following:
- Failure of a financial advisor to disclose the risks of an investment or strategy
- Failure of a financial advisor to disclose the cost or commission of a transaction at the time of the recommendation
- Failure of a financial advisor to consider and discuss with you the relative pros and cons of buying or selling an investment, or pursuing an investment strategy
- Failure of a financial advisor to disclose financial interests he or his employing brokerage firm may have in the investment being recommended to you for purchase
- Failure of a financial advisor to put your interests in front of his own when recommending to buy, sell, or hold an investment
- Failure to disclose all material facts prior to recommending a transaction (i.e., telling you part of what you need to know instead of everything you need to know in order to make an informed decision)
What Laws Exist That Protect Me Against Securities Fraud?
Investors are afforded protection under both federal and state securities laws. At the federal level, the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and Rule 10b-5 protect investors against deceptive and manipulative acts in the purchase or sale of securities. Rule 10b-5 makes it unlawful to employ a device or scheme to defraud, to make any untrue statement of material fact or omit to state a material fact not misleading, or to engage in any practice that would constitute a fraud. Similarly, most states have enacted comprehensive statutes to protect investors, known as “blue sky” laws.
In addition, the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have set forth conduct rules and regulations to protect investors. Violation of these rules and regulations may serve as compelling evidence that your brokerage firm or financial advisor has engaged in actionable misconduct
What are the Common Signs of Fraud or Misrepresentation?
Before we can determine whether there might have been some element of investment fraud in your case, we need to review the facts of your particular situation carefully. Every case is different, and the specific facts determine how and when the investor protection laws apply.
However, to get a general idea of whether you might have a case against your broker for investment fraud, there are some questions you can ask yourself. Have you witnessed or experienced any of these common signs of broker fraud:
- Your investment portfolio suffered sudden, substantial losses
- You’ve noticed unusual or mysterious withdrawals / losses in your portfolio
- You’ve observed an excessive number of trades in your investment portfolio — or trades you never knew about and didn’t authorize
- Your broker seemed unusually eager for you to make a particular investment decision, even though the investment seemed risky or you seemed uncomfortable
- Your broker was not paying attention to your portfolio and seemed careless or lazy when handling your investments
- You’ve since learned that your broker / advisor might have lied, omitted facts, made misleading statements, or failed to fully disclose a risk or a conflict of interest
Schedule a Free Consultation Today
Fraud is a complex area of the law. The Wolper Law Firm has extensive experience evaluating and litigating claims involving fraud or misrepresentation. Let the Wolper Law Firm take an aggressive stand for the money you’re owed. We offer free initial consultations, so contact our office and get answers to your questions.