Investment and Securities Fraud 101: A Look at Different Claims That Qualify

Investment and Securities

Suspect that you are a victim of investment or securities fraud? 

Financial fraud takes many forms and grows more sophisticated with advancements in technology. So, the risk of falling prey to fraudsters for beginners and unsuspecting investors is higher today than ever. 

Fraud disguises itself quite well, and you often never know you are a victim until it is too late. 

That said, there is something you can do if you are a victim of fraud- you can file a claim with an investment and securities fraud attorney. But does your case actually qualify? Here is a quick look at the different claims that fall under investment and securities fraud:  

1. Breach of Fiduciary Duty

Your investment manager has a fiduciary duty to make decisions in your best interest. If that is breached, for example, if your adviser acts in a way that conflicts with your interest, and consequently, you suffer losses, you can file litigation. 

2. Hedge Fund Fraud 

A hedge fund, which basically pools several investor funds together and invests them in different securities under the guidance of an investment manager, is one of the most popular investment vehicles today. Investors consider it a “safe” investment. Now, hedge fund fraud can take many shapes, including making misleading or false claims to misrepresent a fund’s actual situation. 

3. Unauthorized Buying/ Selling of Assets 

Unless otherwise stated in writing, your investment broker should always seek explicit permission from you before making a trade, that is, buying or selling your assets. So, even if they have your best interest at heart, you can actually file a claim against your adviser for unauthorized trading on your behalf.  

4. Ponzi Schemes 

A Ponzi scheme is an investment scam where unsuspecting investors are misled into investing their money with a promise of high returns. In reality, earlier investors are paid “returns” from funds invested by those who come in later, not from investment profits. In the end, some investors lose their money. 

5. Over-Exposure to Certain Assets 

Putting all your money in one investment increases your risk of loss, which is why diversifying your portfolio is essential. Investment brokers know this and, under the duty of care, should make decisions that protect your assets. So, if they over-expose you to particular assets and you lose your money because of it, you can file litigation. 

6. Failing to Execute Your Will 

Having an investment broker does not take away your right to make decisions concerning your investment. So, if you file a request, your manager should execute it. If they refuse or ignore it, that qualifies as financial fraud. 

7. Negligence

Your investment manager has a duty to supervise and adequately safeguard your investment. If they fall short of what is expected of them as per industry standards and you suffer losses, you can file a negligence claim.  

8. Churning

Churning is an unethical practice whereby a broker executes excessive trades to earn a commission. That benefits them but hurts you financially. 

Are You a Victim of Any of the Above? Get an Investment and Securities Fraud Attorney to Help You File a Claim

Financial fraud covers many types of misconduct, and the above list includes the most common ones. However, it is hard to cover everything. So, if you feel like your investment firm has defrauded you, talk to an investment and securities lawyer immediately so that they can investigate and advise you on the best action.