Stock market fraud is a concern for all investors. Whether you invest on your own, through a brokerage firm or with an investment advisor, there is a risk that market manipulation and other fraudulent practices could leave you facing substantial losses. Here are five examples of stock market fraud schemes that present risks for investors in 2021—and for which a stock market attorney may be able to help you recover damages if you fall victim:
1. Pump-and-Dump Schemes
Pump-and-dump schemes involve promoting a stock in order to drive interest among investors and thus drive the price of the stock sky-high. Then, once the stock reaches the schemers’ targeted price, they sell their shares and the stock’s value plummets back to Earth. Pump-and-dump schemes are illegal, and investors who lose money in these schemes can file lawsuits to recover their losses. For those who rely on their broker’s or investment advisor’s advice, filing a claim in FINRA arbitration may be an option as well.
2. Email and Social Media Schemes
Email and social media schemes have proliferated in recent years. These schemes involve either targeting potential investors directly via email or promoting investment opportunities on social media. Scammers will typically either try to pressure potential investors by promoting “can’t miss” opportunities or attempt to trick investors with false or misleading information.
3. Affinity Fraud Schemes
Affinity fraud schemes target specific groups of investors, such as those with particular interests, those with particular affiliations or those with particular characteristics (i.e. senior investors). They rely on the ability to build trust—and then abuse this trust in order to steer investors into fraudulent or high-risk investments. We have recently seen cases of affinity fraud schemes involving community leaders, religious leaders, professional athletes, and even close friends and family members.
4. Ponzi Schemes
Ponzi schemes have seen a resurgence in popularity in 2021. These schemes involve convincing investors to buy into a fraudulent investment opportunity and then using subsequent investors’ principal to pay “returns” to earlier investors. Ponzi schemes can involve all types of investments, including stocks, REITs, structured investment products and cryptocurrency.
5. Impersonation and Imposter Schemes
We have also recently seen a resurgence in impersonation and imposter scams. In some cases, scammers impersonate U.S. Securities and Exchange Commission (SEC) officials and send letters or emails designed to obtain investors’ personal information or get them to invest in “approved” securities. In others, imposters are pumping up particular stocks on social media and fake websites. These types of scams are becoming increasingly sophisticated, and retail investors must be very careful to ensure that they are making decisions based on valid and reliable information.
Speak with a Stock Market Attorney for Free
Are you concerned that you may be a victim of stock market fraud? If so, you should speak with an attorney promptly. To schedule a free, no-obligation consultation with an investment fraud attorney at Zamansky LLC, call 212-742-1414 or tell us how we can reach you online now.