How Our Texas Investment Fraud Lawyer Can Help
It’s normal to be dejected and disappointed after suffering a substantial loss on an investment. At Wolper Law Firm, P.A., our experienced team of investment fraud lawyers in Texas will help you understand your legal options and work with you to obtain compensation for your losses. As soon as we accept your case, we’ll fight tirelessly to get you the compensation you deserve.
Contact Wolper Law Firm, P.A. today to learn how we can assist you with your investment losses due to investment or stock fraud. Call us at 855.453.8605 to arrange a free consultation with a seasoned Texas investor fraud attorney.
The Wolper Law Firm, P.A. is well-versed in cases of investment fraud. All securities professionals are regulated through Financial Industry Regulatory Authority (FINRA). FINRA sets standards that protect investors against unscrupulous activities from stockbrokers, financial advisors, and their firms. These include:
- Churning: These are excessive trades to generate commissions.
- Investment loss: The fast and unexplained losses from investing in stocks, bonds, mutual funds, and private placements.
- Misconduct: The sudden withdrawals of money from your account without your authorization or any explanation.
- Unauthorized trading: These are trades that you didn’t authorize but the broker or advisor did them anyway.
- The lack of communication: This is when the brokerage or advisory firm no longer responds to your calls or emails.
- Unsuitable investments: Recommending investments that are too risky or aggressive for you based on your income, net worth, and risk tolerance. The broker or advisor has an obligation to assess these risks before making any recommendations to you.
- Selling away: This involves recommending investments that are outside the supervision of the broker or advisor’s firm. Things such as new businesses that were formed by them and recommended to you as ground-floor opportunities are banned by FINRA.
- Elder Financial Abuse: When a loved one becomes older, they may go through cognitive decline. This affects their ability to make sound financial decisions. Normally, a power of attorney is given to a loved one or a trusted person. Sometimes, this person takes advantage of the situation and exploits what is happening for their benefit. Stockbrokers and financial advisors have a legal obligation to ensure that this form of abuse is not occurring.
- Securities fraud: Misrepresenting the risks of the investment and important characteristics to make smart financial decisions.
If you feel that you are the victim of stockbroker or financial advisor misconduct, contact the Texas investment fraud attorney immediately. We will review your case and go after the individuals and firms that are responsible. We are the best investment fraud attorneys in Texas and will stand up for you. We offer free consultations of your case, so call us today at 800.931.8452.
What is Investment Fraud?
The Federal Bureau of Investigation (FBI), which investigates criminal cases of investment fraud, defines investment fraud as the “illegal sale or purported sale of financial instruments.” The FBI has a long and successful track record of investigating investment frauds and related crimes, prosecuting the offenders and bringing them to justice. Some hallmarks of investment fraud are offers of investments with low or no risk, guaranteed returns, too consistent returns, complicated techniques, or unregistered securities.
It is the duty of every qualified stockbroker and financial advisor to act in the best interests of their clients. This means that they must put the interests of the investor ahead of their own. A broker or advisor has a fiduciary duty to their clients to act in their best interests, and if they do not, they should be held accountable for their actions.
How Do You Know If You Have Been a Victim of Fraud?
Keep an eye out for any of these potential red flags of fraudulent investment activity. Investment fraud may be recognized by its many telltale indications. Here are some of the more frequent ones:
- A sudden and unexpected loss in your accounts
- Trades you don’t recognize or understand
- Unexpected large gains or losses
- An overall decline in your accounts over time
- Excessive transactions that can’t be explained
- Losses in which other similar investments saw gains.
Common Investment Fraud Schemes
Every year, investment fraud costs American investors billions of dollars and is a criminal as well as a civil concern. There are a variety of ways in which an investor’s money can be stolen. Here are the most common investment fraud schemes:
1. Ponzi Schemes
These fraudulent pyramid schemes got their name from Charles Ponzi, a con artist who operated in the 1920s and convinced thousands of people to engage in a scam involving the speculating of postage stamps. Ponzi schemes are still utilized today and continue to operate in a manner that is analogous to robbing one person to pay the second and robbing the second person to pay the third. This means that money from new investors is used to reimburse earlier investors until the plan goes belly up and everyone loses the money except the fraudster. In a Ponzi scheme, as opposed to a pyramid scheme (which comes next on the list), the investments or assets that are supposed to underpin the system typically do not even exist.
2. Pyramid Schemes
A pyramid scheme is an investment program that is primarily focused on recruiting others to join in exchange for an investment or fee. Investing money and recruiting new investors are the only requirements of participants in pyramid schemes. Despite assertions that they are selling legal goods or services, the con artists use a significant portion of the money invested to make “returns” to early-stage investors.
Even if the things being marketed have legitimacy, the pyramid scheme will fail in the end. At some point, the scale of the scheme becomes unmanageable, and the promoters are no longer able to attract sufficient capital from new investors to pay back earlier investors. In most cases, the fraudsters who are behind these scams will go to tremendous lengths to make their programs look like genuine multi-level marketing opportunities.
3. Pump-and-dump scams
Most cryptocurrency scams fall under this umbrella. Fraudsters will pull off this scam by purchasing low-priced shares of some company. They sit on the shares for a while, then they begin disseminating misleading information with the intention of driving up the price of the stock by generating more interest in it. As a direct consequence of this, there is a significant rise in demand, and consumers, thinking they are receiving a good bargain, fall for the ruse and invest in the stock.
When the stock prices have reached a sufficiently high price, the fraudsters dump their stocks and vanish into thin air. Investors are left holding basically worthless stock and suffering a significant financial loss. Always proceed with extreme caution when dealing with individuals who try to sell you stock online and claim to have “insider information.”
4. Pre-IPO investment fraud
Fraudsters would present their victims an exciting opportunity to purchase stock in a company that isn’t yet listed on the stock exchange. However, the company does not go public, and the person who approached you is either not affiliated with it or has no connection to it. Prior to a company’s public debut, scams like these are commonplace. These types of investments carry a high level of risk and particularly appeal to people who want to get rich quickly.
5. Promissory notes fraud
A promissory note is comparable to a loan agreement, but with a lot fewer terms and conditions buried in the fine print. It’s common for a firm’s investors to agree to lend the company money for a predetermined period. Companies pledge to return a specified amount to investors in exchange for their money. Promissory notes can be good investments, but the ones that are widely advertised are frequently useless. Individual investors should be extremely wary of this form of investment, as most well-established enterprises have borrowing agreements with financial institutions. Proprietary securities brokers and the SEC are both required to register most valid promissory notes before they can be sold, so keep a close eye out for both. “Risk-free investments,” “assured returns,” and “guaranteed profits” are some of the sales pitches fraudsters use to lure in their victims.
6. Real Estate Investment Frauds
Investors continue to be enticed by the promise of quick returns from real estate investments. Scams involving real estate investments have been around for a long time. Two of the most popular investment pitches involve so-called “hard-money lending” and “property flipping.”
The term “hard-money lending” is used to describe investments in real estate that are not financed by typical bank loans. Investors fund private lenders who lend money to borrowers. Pooled investments are securities and as such are subject to the protections and disclosure obligations provided by securities laws and regulations when money from multiple investors is utilized to buy a property.
Property flipping involves buying troubled real estate, renovating it, and reselling it for a profit. Legally, property flipping with borrowed cash or outside investments is perfectly fine. But that doesn’t mean it’s immune to misuse. A scammer may misrepresent the property’s valuation or the flip’s profit potential to deceive investors. They may also misappropriate borrowed or invested cash or employ unwary investors as “straw buyers” with banks or mortgage lenders, using their names and credit ratings.
You lost your money. Now what?
If you suspect that you have been a victim of investment fraud, you should compile the evidence to be presented either to the FINRA arbitrators or to the judge presiding over the case.
Here are the types of information to include in your evidence file:
- Statements from the accounts that you believe show the suspected fraud
- Name, contact information, license numbers and other information about the broker, brokerage firm or financial advisor who you believe acted fraudulently
- Notes about your telephone and/or in-person interactions with investment advisors that include dates, times and what was said, if possible
- Copies of emails, texts or any other potential written interactions with your broker or advisor
- A timeline of the events, if you think the fraud occurred over a longer period of time
- Your credit reports from all three credit reporting agencies if they show any unusual activity
- A copy of the report if you filed one about the suspected fraud to a police agency
- Witness statements from family or other witnesses, if any, who were with you when you met with your financial advisor.
Texas Investment Fraud FAQs
You may have many questions after discovering that you’ve been a victim of investment fraud, and you’ll want answers as soon as possible. To help you feel more at ease before your session, we’ve compiled a list of commonly asked questions about investment fraud, the FINRA arbitration procedure, and related topics.
Investing fraud may affect everyone. Less-educated investors who blindly trust their brokers or financial advisors may be victims. Regardless of age or financial experience, all investors should regularly check their accounts for illicit behavior.
You have the right to go after your stockbroker or financial professional for misconduct. FINRA has specific rules of conduct for brokers, advisors, and their firms. They must follow these guidelines to look out for you first. A few of the most notable include knowing their customers, such as their investment objectives, risk tolerance, and financial status, before making a recommendation. These are considered to be a part of the client’s profile. Failure to comply with these guidelines can lead to claims of negligence against the individuals and their firm.
We recommend contacting us as soon as possible if you believe you are the victim of stockbroker or financial advisor misconduct. The statute of limitations can vary. The more recent the case, the better the information and evidence we can collect against the individuals and their firm. The longer you wait, the harder it becomes to show wrongdoing and it weakens your case. Contact us immediately to get your free consultation at 800.931.8452.
No, FINRA arbitration isn’t the only way to recover investment fraud losses, but it’s the best approach to get your money back. FINRA arbitration verdicts aren’t appealable, but the rewards often outweigh the risk. In court, rulings are appealable, but the process can take years. Even if the judge rules in your favor, you may not be paid for years. FINRA arbitration can resolve a complaint in 18 months.
Still have questions? Contact Our Texas Investment Fraud Lawyer Today.
Simply give us a call at 855.453.8605 to set up a no-cost consultation with one of our investment fraud attorneys. We can help answer any questions you may have and discuss possible actions to take. Don’t wait, call Wolper Law Firm, P.A. today.