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2020 Year in Review: What Lessons Should Investors Take With Them Into 2021?

December 31, 2020 Blog

As we close the books on a year unlike any other, there is at least some cause for optimism in 2021. But, for investors, the lessons learned in 2020 should serve as warnings that it is more important now than ever to be wary of the risk of investment fraud.

One of the main lessons that investors should take away from 2020 is that it is becoming more and more difficult to protect their investment portfolios. Investment scams are becoming increasingly targeted and sophisticated, and new investment products are hitting the market at an unprecedented rate. While investors should be able to rely on their brokers and investment advisors to help them make informed decisions, in 2020 we, unfortunately, saw many cases of broker and advisor fraud as well.

Here is a look back at some of the major topics our investment fraud attorneys in 2020:

COVID-19 Investment Fraud was (and Continues To Be) a Major Issue

While some people step up to help in times of crisis, others choose to exploit vulnerable circumstances for their own personal gain. Unfortunately, while there are many heroes of the COVID-19 crisis, there are also those who used the crisis as an opportunity to take advantage of unsuspecting investors. COVID-19 investment fraud was a major issue in 2020, and investors will need to continue to be wary of coronavirus-related fraud scams in 2021 as well. Learn more:

Social Media and Influencers are New Sources of Misleading Investment Information

Despite being less than a decade old, the world of social media influencing has already undergone a dramatic transformation. While some people use social media to legitimately promote products and services, there has recently been a discerning trend of individuals using social media to spread misinformation about investment opportunities. In addition to scam artists, this also includes many well-known personalities, who in many cases appear to be unaware that they are misleading their followers into risky investments. Learn more: Individual Investors Must Be Wary of Social Media Investment Promotions, Even From Well-Known Personalities.

Initial Coin Offerings (ICOs) and Other Unregistered Securities Present Major Risks for Investors

The birth of cryptocurrency has also spawned an entirely new type of security: the initial coin offering (ICO). While the U.S. Securities and Exchange Commission (SEC) has clearly stated its position that ICOs are subject to registration, many unregistered ICOs hit the market in 2020. The overall number of unregistered securities offerings is on the rise as well, due in part to the fact that new companies are seeking to raise capital without first taking the time to learn about the laws and regulations that apply. Learn more:

Wealthy Investors Are Still Reeling from Yield Enhancement Strategy (YES) Losses

In recent years, UBS, Merrill Lynch and other brokerage firms have earned substantial fees by selling yield enhancement strategies (YES) to their wealthy clients. At the same time, these clients have suffered substantial losses in these investments—in many cases to the tune of millions of dollars. Our investigations have revealed that brokerage firms largely hid the risks associated with YES investments from their clients, and our investment fraud attorneys are now representing many of these clients in FINRA arbitration. Learn more:

Questions Surround the Vida Longevity Fund

In 2020, our investment fraud attorneys also covered the concerns surrounding Vida Capital Management’s Longevity Fund. Over summer, reports surfaced that investors had unexpectedly experienced two years of returns that were substantially lower than those earned in prior years, and that the negative trend had continued during the first half of the year. We covered the complexities of the Vida Longevity Fund’s “proprietary deal flow” involving “insurance-linked strategies” and “longevity-contingent risk,” and we highlighted the options that are available to the firm’s investors. Learn more:

In a Win for Investors, the SEC’s Regulation Best Interest (Reg BI) Finally Took Effect

One positive development for investors during 2020 was the implementation of the SEC’s Regulation Best Interest (Reg BI). Reg BI took effect on June 30, and it provides several important protections for investors. However, its protections are subject to some important limitations, and we strongly encourage all individual investors to ensure that they have a clear understanding of what Reg BI does and does not do. Learn more: What Investors Should Know about SEC Regulation Best Interest (Reg BI).

FINRA Provides a Wealth of Resources for Individual Investors with Concerns about Fraud

The Financial Industry Regulatory Authority (FINRA) provides an arbitration forum for defrauded investors to recover their losses. It also provides a wealth of resources for investors who have concerns about fraud. In 2020, FINRA published several articles that contain important tips for investors, and we shared our thoughts on what investors need to know about the topics discussed. Learn more:

Speak with an Investment Fraud Attorney at Zamansky LLC

If you believe that you may be a victim of investment fraud, it is important that you discuss your situation with an attorney promptly. At Zamansky LLC, we represent defrauded investors nationwide. For a free and confidential consultation about the options you may have available, please call 212-742-1414 or tell us how we can reach you online today.