There are no guarantees in the investment world. Every investment carries risk, and some carry more risk than others. World events can cause upheavals nobody can predict. If you invest in the securities market and lose money, it does not mean your advisor or stockbroker did anything wrong. However, if you are missing account statements, having trouble getting in touch with your broker, or are seeing losses and are not sure what happened, you need an Illinois securities attorney to review your situation and help you make sense of the matter.
If you’ve been a victim of intentional misconduct or unintentional negligence, the attorneys at Wolper Law Firm, P.A. are here to help you discover what caused your losses and find the truth. We have recovered money in 99% of our cases for wronged or cheated investors. Call us today at 855.291.2720 for a free consultation about your case.
How Can an Illinois Securities Fraud Lawyer Help Me?
People invest in stocks and other financial securities to save for retirement and future goals. It’s natural to trust financial advisors, brokers, and other professionals to properly invest your hard-earned money. Securities and investments are complex, and you expect those professionals to carry out your instructions. If you suffer large financial losses, you may be unsure whether it was because of the fluctuating market or because your broker mishandled your funds. You need an experienced securities fraud attorney to help you discover the truth.
Just because you have lost money, this does not automatically mean you have a legal claim for compensation. You must be able to show that you were the victim of intentional misconduct, fraud, or even unintentional negligence in order to have a claim. The complex nature of securities and investments makes proving fraud or negligence a matter of showing a repeated pattern of improper transactions, deliberate attempts to mislead you, or similar intentional acts. These acts must be carried out in violation of federal or state laws.
These warning signs aren’t things a layperson will know. Unfortunately, many unscrupulous brokers will take advantage of that fact. You need a knowledgeable securities attorney to build your claim and fight for your rights as an investor. Our firm will be able to compile documentation of repeated deliberate or negligent actions from your broker or brokerage firm in their failure to supervise. We can attempt to prove that your broker acted in breach of fiduciary duty, or with an intent to embezzle. We can strengthen your claim with similar case law, as well as proof of previous wrongdoing or negligence when applicable. And finally, we can negotiate on your behalf pre-trial as well as with a formal FINRA arbitration if necessary.
When you come to Wolper Law Firm, P.A., you’re getting a team that has:
- A 99% recovery rate for defrauded and wronged investors.
- Satisfied customers and five-star recommendations.
- Free initial consultation and live chat 24/7.
- Recovered millions of dollars for our clients in dozens of cases.
A record of putting their clients first. No fees unless you win.
Securities Fraud Definition
Under Illinois state law, securities are defined as any note, stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement or investment contract. Securities fraud occurs when investors are misled as to the profitability of their venture, how their funds will be used, or other crucial details of their transaction.
Securities Fraud vs. Wire Fraud
Securities fraud involves misled investors and embezzled funds, whereas wire fraud refers to the method by which they were defrauded. Wire fraud is the use of the internet or online communications to perpetrate criminal activity.
One instance of fraud may involve different charges, such as this recent case involving unauthorized trading and wire fraud. A Chicago trader was accused of unauthorized Treasury bond trades that resulted in $30 million of loss to his employer. He also was accused of embezzlement by falsifying company books to reflect hundreds of thousands in fake commissions. Finally, he attempted to obscure the extent of his fraud by entering fake off-setting trades into a different clearing broker’s system. Each of these instances of deceitful conduct is attached to a different sentence. He was ultimately convicted of three counts of wire fraud and one count of securities fraud, for the different elements of the crime and coverups.
Securities Fraud Examples
Your brokerage firm or financial advisor is supposed to place your interests first. Unfortunately, as countless investors can attest, some brokers do not uphold that responsibility. Fraudulent or negligent brokers may fail to disclose material risks or limitations on investments, like in the case of Thomas Olexa, an Illinois financial advisor accused of failing to advise clients about limitations to a life insurance policy. They may suggest investments that are contrary to their clients’ instructions, or buy and sell stocks in a way that nets them excessive fees at the expense of their clients. Other examples include Ponzi and pyramid schemes, wherein multiple investors are all convinced to pay into a larger project that either does not exist, or whose terms are radically different than those promised. Previous investor funds are then re-dispersed in order to create the illusion of profitability for a time, before the false bubble pops.
Affinity fraud is also unfortunately common throughout Illinois, like in the case of the Fluker family. A Chicago father, son and daughter team were convicted of swindling approximately 2,000 people out of approximately $10.7 million in losses. They targeted the African American community and promised access to affordable housing as well as a return on investment through their “Spend and Redeem” program. By targeting church gatherings, the family was able to capitalize on a sense of shared community trust in order to meet new victims.
Affinity fraud utilizes powerful shared bonds and common languages in order to present phony investment opportunities to the people who are most likely to buy into them. Other groups targeted throughout Illinois include veterans, immigrants, and the elderly.
What is Securities Law?
The federal Securities Act of 1933 prohibits fraud in the sale of securities and requires that investors receive financial and other information about public securities offerings. The Securities Exchange Act of 1934 created the SEC and gave it power to regulate and discipline brokerage firms and their agents.
So-called “blue sky” laws are state laws which protect investors within each state. These laws vary in each state, but generally require companies to register the securities they offer, and they also license financial advisors, brokerages, and brokers.
Some federal laws even protect investors against predatory investment practices by their own state governments. Illinois residents should know that in 2013, the federal Securities and Exchange Commission (SEC) charged the State of Illinois with securities fraud for misleading municipal bond investors about its state-funded pension plan. A federal investigation revealed that the state of Illinois failed to disclose problems within the pension funding schedule to investors while selling more than $2.2 billion in municipal bonds from 2005 to 2009. This enforcement action was only the second time the SEC took action to protect state residents from the actions of their own municipal government in perpetrating financial fraud.
How to Protect Your Investments
Your common sense is your best defense against investment fraud. But if you have questions, you are not alone. There are certain state and federal resources designed to let you check on your broker’s credentials online. And if you need a professional opinion about whether or not an investment action is aboveboard, consult with a securities fraud lawyer.
To protect your investments, consider the following steps:
- Say “no” to investment opportunities that sound too good to be true: Be wary of investment opportunities that promise high returns within a short time. It’s wise to approach offers of sky-high returns and no fees with a healthy dose of skepticism.
- Always check your broker or financial advisor before investing with them: You can verify the credentials of brokers, brokerage firms, and financial advisors using trusted sites such as FINRA BrokerCheck, SEC Check Your Investment Professional, and NASAA Securities regulators by state.
- Don’t allow yourself to be pushed into quick investment decisions: Pressure to invest before an offer disappears is one of the common signs of financial exploitation.
- Ignore anyone who contacts you with an unsolicited securities offering: Be wary of cold calls from a financial services firm or broker. It’s better to say no to unsolicited offers to invest in real estate, stocks, shares, or bonds than risk losing money.
- When in doubt, contact an expert: Contact an Illinois investment fraud attorney for help. Wolper Law Firm can review your claim and ensure that you do not ignore investment fraud red flags and miss the opportunity to recover your loss.
Securities Fraud Warning Signs
It can be difficult to know if your financial advisor or broker is doing something wrong. The financial climate is volatile, and you cannot always assume that a poor performance is the fault of your broker. Financial advisors and brokers have a fiduciary duty to their clients. This means that they must always act in their clients’ best interests, not engage in self-dealing or misuse of funds, and be always transparent with their client. With that in mind, there are some warning signs you can watch for if you believe anything is wrong.
Your broker recommends investments that are unsuitable or that do not align with your previously stated financial goals and acceptable risk. This may be a sign of self-dealing or churning in your account.
Misrepresenting speculative or complicated investment opportunities or failing to fully explain new opportunities when asked.
Large, unexpected losses in your portfolio when the market is performing well or, alternatively, sudden gains in your portfolio when the market abruptly drops. Too many investors are pleased to see their portfolios make big gains when the market drops, but unscrupulous brokers may be shorting stocks and using their clients’ portfolios as covers.
Multiple transactions which were not authorized, especially if they take place in a short period of time. The SEC regulates buying and selling stocks and places time limits on how many may be purchased or sold within a given time. If your broker is doing anything illegal, you could end up paying the fines.
If your broker abruptly becomes difficult to find, won’t answer your phone calls, or seems disinclined to answer questions, you should become immediately suspicious.
Any missing money which cannot be accounted for is an obvious sign that something is wrong.
These are some of the common signs of misconduct. If you have any suspicions that something is not right, you should contact an Illinois securities fraud attorney immediately. We will investigate any misconduct and assist you in taking action before losses overtake you. If you believe your financial advisor or broker has misled you, contact Wolper Law Firm, P.A. today. We will review your accounts and ensure your finances are secure.
What is the Penalty For Securities Fraud?
The Office of the Illinois Secretary of State Securities Department investigates investment fraud. Brokers and financial advisers who commit fraud or embezzle their clients’ money or who commit other criminal acts may be criminally prosecuted. They may face large fines and prison sentences and may lose their securities certificates or brokerage licenses.
Those found guilty of negligence may escape criminal charges but may be required to repay their clients’ money and may lose their right to trade or practice as brokers or advisors. Under the Illinois General Assembly, financial fraud may be prosecuted as a misdemeanor only when the amount does not exceed $500. Securities law violations that exceed $10,000 but remain under $100,000 are considered a Class 2 Felony, and financial crime of over $100,000 is considered a Class 1 Felony in Illinois. The securities fraud statute of limitations in Illinois is generally 5 years from the date of the incident, but exceptions may apply. If you are concerned, report securities violations to an Illinois financial fraud attorney.
Illinois Securities Fraud Lawyer: FAQs
Investment fraud is depressingly common. In 2020, FINRA referred nearly 1,000 cases of fraud and other misconduct for criminal prosecution. That same year, nearly 250 brokers were barred from trading, and 375 more earned temporary suspensions. Investors should not wait to report suspected fraud and misconduct.
Securities fraud elements in Illinois include misrepresentation of a material fact, knowledge of the falsehood, intent to mislead the investor, the investor’s reliance on the falsehood, and damages resulting from the misrepresentation. With this in mind, it is easy for a crooked broker to defraud an investor and it can be difficult for the investor to realize what happened.
Churning is an illegal method dishonest brokers sometimes use to generate commissions. Brokers earn fees and commissions each time securities are bought and sold. These commissions are paid out of the client’s account. Although buying and selling securities by itself isn’t illegal, doing it too often or without notifying the client is. If the broker is earning large commissions and your portfolio isn’t gaining by all the movement, churning could be to blame.
Some types of securities have overtrading or withdrawal fees that can further drain your account. Your broker should not be moving funds around in your portfolio unless they can show it is to benefit the account.
Because of the time and cost of litigation, most brokerage firms today include arbitration clauses in their customer agreements. In arbitration, independent arbitrators, or administrative law judges (ALJs) hear the evidence and arguments from both sides and then make binding decisions. This decision is final and cannot be appealed, unlike a court case. If the decision goes in your favor, the advisor or broker who committed misconduct will have 30 days to pay you your financial award. Arbitration has the advantage of being less expensive and less time-consuming than a traditional securities fraud lawsuit. The disadvantage is that if you lose, you cannot appeal your case. If you are required to arbitrate by the terms of your agreement, our securities attorneys can represent you in your arbitration, just as they would in a trial.
Have More Questions? Contact Our Experienced Illinois Securities Fraud Lawyers at Wolper Law Firm
Fraudsters depend on their victims’ embarrassment and confusion to avoid detection. They know that most people will be unsure whether they’ve really been defrauded, and too ashamed to admit they were fooled, so the fraud goes on. At Wolper Law Firm, P.A., we understand that con artists are clever and know how to take advantage of legal loopholes. What happened was not your fault. We’re here to help get your money back. Once we learn all the details of your case, we’ll advise you about all of the paths to financial recovery that may be available to you.
The Wolper Law Firm, P.A. is a client-focused law firm devoted to recovering investment losses on behalf of aggrieved investors. Our securities fraud attorneys in Illinois can pursue claims nationwide in state and federal courts, appear in arbitration before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (AAA) and JAMS. Wherever your case is being seen, our investment fraud lawyers will represent you and your interests. Our attorneys can help you discover the value of your claim by examining your account statements, communications with your broker, and other information about the market and your portfolio. If you believe you were wronged by an investment advisor or brokerage firm, Wolper Law Firm, P.A. can give you the assistance you need. Call us at 855.291.2720 or visit us online.
Attorney Matthew Wolper
Matt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks.
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