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What is investment fraud, and what can you do about it?

| Jun 16, 2021 | Business Litigation

As an investor, there is one thing you should watch out for. That thing is investment fraud. When you trust your money in the hands of a stockbroker or investment firm, you expect them to do what’s right for you.

Stockbrokers and investment firms have regulations that they must follow, and they do owe a fiduciary duty to you, their client. Whenever that duty is breached, individual investors may suffer from financial losses that impact them now and long into the future.

What kinds of investment fraud could impact your portfolio?

There are a few kinds of investment fraud that could impact your portfolio. These may include fraudulent acts such as misrepresenting an investment opportunity to get you to invest more than you’re comfortable with, making excessive trades to generate additional transaction fees, making investments that are higher risk that you’re comfortable with, executing trades without asking if you’d like them to be completed and others.

How can you recognize investment fraud?

Investment fraud can happen to anyone, but there are some red flags you can look out for. These may include:

  • Promises of unrealistic gains from investments if you invest more than your tolerance level
  • Transaction fees for a higher number of trades than usual
  • Investing your money into “meme” stocks or high-risk companies without your permission

There are all kinds of investment fraud situations that can occur, and all of them put your investments at risk. Many times, the goal is got the people completing the fraudulent acts to make quick money, and they are not at all concerned with what happens to your investments. You could end up losing everything because of their actions, and if that happens, you deserve to fight back and be compensated for their breach of fiduciary duty.

Understand your rights if you find yourself looking at a portfolio that has lost more than expected. If any foul play led to these investments falling through, then the brokers and investment firms who were responsible may be held liable for their actions. It’s up to you to start the process of making a claim, so your concerns can be investigated.

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