Consumer Rights About Investor Fraud

By January 4, 2017 October 18th, 2017 Resources

Consumers can protect their rights regarding investor fraud through proper education and safeguarding habits. An investment fraud lawyer with Fishman Investment Recovery Lawyers can assist clients with recovering damages if a crime has been committed.

What is Securities Fraud?

This type of fraud can occur in several different ways. Some of the most common scams involve pyramid schemes, insider trading, and manipulating the stock market.

– Insider trading occurs if corporate professionals violate confidentiality clauses, sharing or selling financial information to other people. After receiving this confidential information, the recipients then buy or sell stocks for a profit.

– Pyramid schemes are another type of investor fraud. This business model recruits members via a promise of payment or services so long as the investor recruits other members to the scheme. The funds brought in from the new investors is paid out to the established members, inevitably causing the pyramid to be unsustainable while the new investors lose their money.

– Stock market manipulation usually involves telemarketers targeting investors to persuade them to invest in unprofitable investments. These offers are often made by email or over the phone, and the investment funds are simply pocketed instead of made to work for the consumers.

Consumer Rights

An investment fraud lawyer can help consumers learn the difference between investor fraud and problems that don’t involve securities fraud.

Professional brokers cannot misrepresent risks or earnings by giving false information. Misrepresentation can include providing false or misleading information or omitting relevant information that an investor would need in order to make an informed decision.

– In addition, brokers have a responsibility to recommend investments that follow any specific criteria provided by clients. Recommending a stock that is excessively high-risk to a person who has indicated that only low-risk investments are desired would be an example of an unsuitability breach.

– Unnecessary transactions are known as “churning.” Unethical brokers may engage in this process to create extra transaction fees.

– An overconcentration of investments without diversifying in various sectors can also violate broker responsibilities.

If investor fraud is suspected, contacting an investment fraud lawyer like those at Fishman Investment Recovery Lawyers can be the first step toward protecting interests and avoiding potential large-scale losses. Our cases are taken on a contingency basis, which eliminates fees in the absence of a recovery.

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