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Fraud Investment

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Hard-earned money invested through investment brokers is not always safe. Few investment brokers give investors a hard time by investing the investor’s money in inappropriate investments thus leading to fraudulent dealings. It is advisable for investors to gain in-depth knowledge of fraudulent investment and then invest their money so as to avoid getting trapped in an investment fraud.

Investment frauds can lead to huge financial losses and this can be shocking, upsetting, and demoralizing to the investor. Follow the golden rules for investment so as to safeguard yourself from fraudulent dealers. If you have been deceived in such a scheme, a fraud investment lawyer would be able to help you with the legal issues involved in recovering your money.


Guide to investment fraud

  • Investment fraud is mainly due to funds mismanagement by your stockbroker.
  • Investment fraud comes about when your stockbroker sells your stocks and mutual funds. He does this for his personal gains i.e. heavy commission for that particular transaction and not with the investor’s interests in mind. The investment broker doesn’t bother to pass on any details regarding these to you.
  • Investment fraud can happen if your stock broker or insurance agent does not educate you about the various penalties of early withdrawal.
  • Few investment brokers keep switching from one mutual fund to another without taking prior approval from the investor. Investor invests in mutual funds assuming that they are long term investments. As switching from one fund to another fund is permissible, brokers switch from one fund to another for their personal benefit.
  • Stock churning (excessive selling and buying) is another major cause for investment fraud.
  • Investors trust their investment brokers completely and entrust them their money, it is the duty of the investment broker to keep up the faith of the client. If he fails to do so, he can be classified under breach of fiduciary duty for investment fraud.
  • Brokers have to recommend investment tools that suit the investor perfectly. They cannot force the investor to invest blindly but should educate the investor completely about the investment risks. Brokers should follow KYC (Know your Customer) concept perfectly. If brokers fail to do any of the above, it is a case of investment fraud.
  • In few cases, investors are forced to invest in an instrument by intimidating, frightening, confusing, and lying to them.
  • At times stockbrokers sell your annuities when you need the money sooner. This can also perpetuate investment fraud.
  • Investment fraud has become a common occurrence with online transactions too.

Fraud investment lawyer


Federal officials have pointed out that Americans have lost millions of dollars through investment frauds. A large section of the general public does not have an idea about the right investment and entrusts the job in the hands of investment brokers. Few people lose the money they have invested though this is not always because of money mishandling by brokers. If you have a feeling that your money has been mishandled then you have to take legal advice and opinion to sort out the issue.

While opening an account with the investment broker, the investment broker signs either an arbitration agreement or dispute agreement with the client. Depending on the type of agreement signed, the client can proceed with his recovery claims against the investment broker. Most of the brokers insist on their clients signing an arbitration agreement rather than a dispute agreement. Clients can fight for recovery either through arbitration or by filing a case in the court.


Arbitration proceedings
  • Arbitrations are conducted in the presence of three arbitrators. Among the three, one person will be the stock broker himself or a member of the securities industry. The other two are usually lawyers, accountants or any other individuals who do not belong to the securities industry. There is no specific qualification required to become a public arbitrator.
  • Arbitration proceedings do not continue for a long time and are shorter when compared to court proceedings.
  • Arbitration proceedings are cost-effective when compared to court proceedings.
  • In arbitration proceedings, no evidences are produced. Therefore they are more controversial when compared to court proceedings.
Court proceedings
  • Presenting the case in the court will include hiring an investment lawyer. Investment lawyers are trained to handle such cases. They gain substantial knowledge from the experience they have in the same field.
  • Investment lawyers take the case of the client and invest it thoroughly and present it to the judge. This gives the case better clarity.
  • All evidences related to the case are produced and inquired in the court.
  • As the case is appealed right in front of the judge, the judge himself plays an active role in settling issues between the two parties.
  • Court cases are an expensive affair when compared to arbitration procedure. Lawyers charge either percentage (contingent) fee or hourly fee or flat fee.
Role of fraud investment lawyer
  • They educate the client on various types of investment fraud.
  • They give their clients all information and help them in determining if they have been duped by careless or deceitful financial service providers.
  • They explicate the various alternatives and options an investor has to recover his/her investment from a fraudulent investment broker.
  • Few investment lawyers also educate their clients on good investment picks and good investment brokers.

Always remember


  • Take an active part in your account and its dealings.
  • Keep track of profit and loss on your investments.
  • Always relate the profits and losses to the current market condition.
  • Check before you invest in any recommendations made by your broker. Study the recommendation thoroughly.
  • Above all, verify your broker thoroughly before you make your investments through him.
Fraud Investment

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Fraud Investment