Securities Fraud Attorney

What Is Securities Fraud

Securities fraud refers to wrongful practices in the securities industry that aim to deceive investors. This fraud is a serious offense that can lead to substantial financial losses.

If securities fraud has impacted you, you could have the right to demand FINRA arbitration and pursue damages.

The securities fraud plaintiff attorneys with Erez Law, PLLC, understand the complexities of a securities fraud lawsuits. We can help protect you from unscrupulous parties and pursue compensation for your losses.

Contact Erez Law, PLLC today for a free, confidential consultation.

What Is Securities Fraud?

Securities fraud encompasses unlawful activities, including misrepresentation, unsuitable recommendations, excessive trading or churning, over-concentration, unauthorized trading, and Ponzi schemes. These deceptive practices can occur in various investment vehicles, such as stocks, bonds, mutual funds, and options.

The perpetrators of securities fraud often exploit investors’ trust and use false or misleading information to induce them into making investment decisions that ultimately benefit the fraudsters. Securities fraud is also committed when investment advisors recommend unsuitable investments or trade primarily for the purpose of obtaining more compensation for themselves rather than considering what is in the best interest of the investor whose interests they are paid to represent. While perpetrators of securities fraud may face criminal prosecution, victims may be entitled to pursue separate civil action to seek compensation for their losses.

The U.S. Securities and Exchange Commission (SEC) regulates the securities industry in the United States. The SEC’s website provides valuable information about securities regulations, investor education, and enforcement actions against fraudulent individuals or entities. Understanding the laws the SEC enforces can help investors navigate the complex world of securities.

The Financial Industry Regulatory Authority (FINRA) is a government-authorized watchdog that oversees all U.S. broker-dealers. FINRA is a not-for-profit organization dedicated to safeguarding capital market integrity with essential support to investors, policymakers, regulators, and other stakeholders. If you wish to sue a brokerage firm in the United States, you must go through FINRA arbitration.

How a Nationwide Securities Lawyer Can Help You

At Erez Law, PLLC, we represent investors against brokerage firms in FINRA arbitration cases after they have suffered considerable losses. We have recovered over $200 million in lost investments for our clients around the world.

Our team is knowledgeable about securities laws. Securities law is complex, and the regulations can change without notice. An experienced stock market lawyer monitors changes in regulations and federal or state court decisions that could impact your case. Our legal team has knowledge of these complex regulations and keen insight into the workings of the SEC, which we use to advocate for your position during FINRA arbitrations.

We also represent investors in cases where broker misconduct or deception is suspected. We can review the communications you had with your broker or adviser to search for any material misrepresentations or deficiencies in suitability assessments. You may have been deceived by your broker, or the brokerage firm may have violated the terms of an agreement you signed in good faith, providing a legal theory that serves as the basis for your recovery.

How We Help Protect Investor Finances

A securities attorney can help if you have been harmed by people or companies that have committed investment fraud. They may seek compensation for you, pursuing recovery of any money or property that you lost through fraud.

Your lawyer may advise you whether you can sue a broker or investment firm that may have defrauded you, represent you in arbitration proceedings, or file other appropriate legal action to help you recover money lost in a fraudulent investment.

Recognizing Signs of Securities Fraud

Investors should be aware of the warning signs and red flags associated with securities fraud, including:

A simple way to recognize potential fraud is to think of the adage, “If it sounds too good to be true, it probably is.” The Federal Bureau of Investigation (FBI) offers resources highlighting common fraud scenarios and providing guidance on protecting yourself from falling victim to unlawful activities.

The Southern District of Florida United States Attorney’s Office provides updates on recent prosecutions related to securities fraud and other financial crimes. By staying informed about the latest cases, investors can better understand fraudsters’ tactics and take appropriate measures to protect their investments.

Types of Securities Fraud

We handle any and all types of securities fraud, such as:

  • Ponzi Schemes: These types of fraudulent schemes use money from new investors to pay off returns to old investors.
  • Breach of fiduciary duty: Brokers have a duty to act in their clients’ best interests. If they place their own financial interests above those of their clients, they have breached this duty, and their actions constitute fraud.
  • Churning: Churning is when a broker or firm recommends frequent trades just to collect the commission on these trades.
  • Over Concentration: A broker or investment firm works to diversify their clients’ portfolios to lower risk. If they do not adequately diversify, and you suffer losses as a result, this is considered fraud.
  • Unauthorized trading: Unauthorized trading occurs any time a broker, financial advisor, or firm makes a trade without your permission.
  • Selling Away: Brokers are only authorized to sell investments that are vetted and approved by their broker-dealer and employer. When brokers sell or recommend investments not approved by their broker dealer it is a violation of securities rules and is called “selling away”.
  • Broker embezzlement: Fraudulent brokers will sometimes embezzle funds provided to them for investment.
  • Failure to supervise: Brokers and investment firms have a duty to keep a watchful eye on their clients’ portfolios and regularly review them for red flags. If you suffered financial losses as a result of an investment firm not adequately supervising their brokers, and those brokers didn’t manage your portfolio attentively, you may be able to recover these losses.
  • Fund or bond switching: Similar to churning, this type of fraud occurs when a broker, firm, or advisor asks their clients to sell off a certain security or bond, then purchases another security or bond with identical characteristics just to generate a commission.
  • Pump and dump schemes: Also called internet fraud, this type of fraud occurs when a broker or firm ‘pumps’ up the price of a particular stock or security through false or misleading information, usually posted to a forum or social network, and then ‘dumps’ the stock or security once the false information causes the price to rise.

Can Securities Fraud Victims Pursue Civil Litigation for Damages?

If you have fallen victim to securities fraud, the exclusive resource for suing brokerage firms for your losses is to participate in FINRA arbitration. It is essential to carefully consider this step and consult with our securities fraud attorneys to assess the merits of your case.

If you are considering taking legal action against a registered investment advisor, there is likely an arbitration clause in your agreement. While this is not technically FINRA arbitration, it follows a similar process and capable legal representation is essential to ensure you have a chance at recovering your losses.

The FINRA arbitration process for securities fraud involves several steps:

  • Filing a statement of claim
  • Selecting arbitrators
  • Gathering evidence
  • Consulting experts
  • Negotiating a settlement
  • Preparing a case for arbitration if a settlement is unlikely

Legal Remedies Available for Victims of Securities Fraud

Victims of securities fraud may be entitled to various forms of compensation. These can include recovering the investment losses suffered due to the fraudulent activities and potentially receiving punitive damages to punish the wrongdoers.

Why Hire Erez Law as Your Securities Fraud Lawyer?

The Erez Law legal team focuses exclusively on securities fraud cases. This singular focus has allowed us to develop an in-depth knowledge of this complex area of the law and to recover more than $200 million in investor funds. We have a 99% success rate and over 45 years of combined legal experience in this arena. We have tried over 50 cases to award. When you hire our firm, you know you are in capable hands and that we will do everything possible to help you recover your funds.

Our attorneys can deliver aggressive representation in arbitration. While we work many cases in FINRA arbitration, we have experience favorably resolving cases in other types of arbitration, too. You may have a contract that requires binding arbitration for any disputes rather than taking your claim to court. Our attorneys have vast experience in FINRA arbitrations, AAA arbitrations, and JAMS arbitrations. Your securities lawyer can represent you in arbitration and protect your interests.

Over the last two decades, our firm has represented thousands of investors. We thoroughly prepare every case so we know its ins and outs when we arbitrate. Our award-winning trial attorneys have won against some of the biggest brokerages in the country, and we will fight diligently to win in your case, too.

When you have been defrauded by brokerage firms or financial advisors, the last thing you want to do is to lose more money. We respect that, which is why we take our cases on a contingency basis. We are so confident in our ability to secure favorable results that we do all of the work upfront with no promise of getting paid unless we successfully recover compensation on your behalf. We use our considerable resources to advance your case and only get paid if we deliver results. That’s a win-win for you.

Contact Erez Law for a Free, Confidential Consultation

While regulatory bodies and law enforcement agencies are crucial in combating securities fraud, investors are also responsible for remaining vigilant. By staying informed, conducting due diligence on investment opportunities, and seeking professional advice, investors can protect themselves from falling victim to fraudulent schemes. Remember, prevention is always better than pursuing legal action after the fact.

However, our securities fraud plaintiff attorneys can guide you through the process of filing a FINRA arbitration for securities fraud damages when the circumstances require it. If you believe you have been a victim of securities fraud, protect your financial interests. Consulting with a reputable securities fraud attorney is a critical first step in understanding your rights and exploring your legal options. You and your attorney can discuss whether participating in arbitration for securities fraud is viable.

Our experienced attorneys work on a contingency fee basis, so you owe no fees unless we win. Contact Erez Law, PLLC today for a free, confidential consultation. Your financial security is worth fighting for.

More Securities Fraud FAQs

How Do You Report Securities Fraud?

You can report securities fraud to the U.S. Securities and Exchange Commission. There are multiple resources available depending on the specific type of crime you suspect. You can file a complaint online and provide your name and contact information, the suspected company name and details, the offense you believe they committed, and documentation to support your claim.

How Do I Find a Securities Fraud Attorney?

You can look online for a securities fraud attorney. However, don’t pick the first firm you see. Perform thorough research into their credentials, client reviews, and ratings from legal organizations. Schedule a consultation and gather as much information as possible from the person you meet. You should also ask around for referrals from people you trust, such as friends or family.

Can I Sue for Securities Fraud?

Yes, you can sue for securities fraud. The Securities Act of 1933 regulates offers and sales of securities. It requires companies to inform their investors of important financial information and prohibits misrepresentation and other fraudulent activities while selling publicly traded securities. If you suffered losses because of your advisor or the brokerage firm’s fraudulent actions, you could file a lawsuit to recover those losses.

How Common Are Security Fraud Investigations?

The U.S. Securities and Exchange Commission handles hundreds of security fraud investigations every year. Many investigations result from tips or complaints made by the public. The most common violations involve stealing a customer’s securities or funds, misrepresenting important information about investments, insider trading, manipulating market prices of securities, and selling unregistered securities.

How Do I Recover Funds from a Security Fraud Investment?

There are several options you can choose from to recover funds lost from a security fraud investment. If there’s a dispute with the broker or firm you invested with, you could file an arbitration claim or request mediation through FINRA. You could seek restitution from the SEC or FINRA through enforcement action. The SEC can distribute financial penalties for the losses investors suffered under the Fair Fund provision of the Sarbanes-Oxley Act of 2002.

Who Investigates Securities Fraud?

The Division of Enforcement is a division of the U.S. Securities and Exchange Commission that investigates securities fraud. They perform confidential investigations to prevent any evidence from being destroyed or going missing and to preserve the reputation of the firm or individual being investigated. After reviewing all the evidence they gathered, they will determine whether there was a violation of securities regulations and recommend whether or not to prosecute.

Is Securities Fraud a Criminal or Civil Offense?

Securities fraud is a criminal offense. However, penalties could be criminal or civil. Every state has its own securities commission and laws regarding these crimes. If there’s a criminal investigation of the fraud, the convicted party could face a federal prison sentence and fines. If the Securities and Exchange Commission and National Associated of Securities Dealers investigate the allegations and discover fraud, they could impose civil fines against the individual or company.

Why Do People Commit Security Fraud?

People commit securities fraud for multiple reasons. One main reason is pressure. This pressure could include being unable to pay the bills, maintaining productivity at work, or not having as nice a car as the neighbors. Pressure combined with opportunity can result in securities fraud, too. The person might see an opportunity to abuse their position at a company by stealing money from an investor. Other perpetrators rationalize their actions by saying they’re borrowing someone else’s money and intend to replace it before the victim realizes what happened. In their mind, they’re not harming anyone because no one knows that they committed a crime. Some employees feel pressure from an authority figure to commit a crime. They might discover security fraud occurred but keep quiet because they don’t want to lose their job. Their boss might even force them to participate in the offense as extra assurance that their subordinate won’t go to the authorities.