Investment fraud claims arise from losses that are related to misconduct or causes unrelated to securities market forces. Investment fraud that is related to registered securities is governed by the Securities Exchange Commission (SEC). Investment fraud claims filed under Section 10(b)(5), the fraud provisions of the Securities Exchange Act of 1934, or other claims for misrepresentations, may involve some aspects of fraud, deception, misrepresentation, non-disclosure or omission of material facts related to the purchase or sale of a security.
In many instances, Wall Street’s pursuit of profits may lead to the trampling of investor rights by unscrupulous brokerage firms and its financial advisors. Klayman & Toskes, P.A. has extensive experience representing investors in legal actions involving claims for fraudulent misrepresentation and omission of material facts, breach of fiduciary duty, unsuitable investment advice, excessive trading or “churning” and private securities transactions, known as “selling away” (i.e., investment products not approved by brokerage firm).
Investment fraud related to non-registered securities may seem legitimate due to a promoter’s fraudulent misrepresentations which are disguised by methods that make unsophisticated investors unaware of the deception. Targeted investors include the elderly, members of a group or organization (affinity fraud) or individual with little investment experience. Common red flags of investment fraud include:
- Guarantees of Principal or Interest;
- Sold Without Prospectus (unregistered);
- Unfamiliar Custodian for Funds;
- Complex, Difficult to Understand Investment;
- Advisors Without Proper Credentials or Licenses;
- Limited Investment Availability;
- Advisor States “His Family Members” Invested;
- Unexpected Contact by Phone or Email; and
- Sales Tactics Create Urgency.
In many instances, investment fraud is perpetrated by individuals who are not currently licensed and/or in good standing with federal and state regulators who oversee the sale of investment and insurance products. Types of investment fraud schemes include:
- Ponzi Schemes;
- Promissory Notes;
- “Pump and Dump” Penny Stock;
- Offshore Scams;
- Pyramid Schemes;
- Start-up Companies; and
- Private Placements.
Klayman & Toskes, PA represents investors in securities and investment fraud cases on a contingency basis. Declining stock markets typically expose many fraudulent investment schemes as investors demand the withdrawal of their funds. The law firm routinely represents investors in claims against issuers, underwriters, third-party professionals, and others responsible parties for violations of the securities laws. We have significant experience representing investors who have been victimized by investment fraud.