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How Can You Recover Your Losses if You are a Victim of Investment Fraud?

August 31, 2020 Blog

As an individual investor, it is important to be aware of the warning signs for investment fraud. Unfortunately, investment fraud is a very real concern, and the U.S. Securities and Exchange Commission (SEC) reports that “[e]very year, thousands of U.S. investors lose money to fraud and other securities law violations.” Our securities fraud attorneys represent many of these investors, and each year we recover millions of dollars in compensation for our clients through arbitration with the Financial Industry Regulatory Authority (FINRA) and in federal courts across the country.

If you are a victim of investment fraud, what can you do to recover your losses?

SEC Recovery Options for Defrauded Investors

The SEC offers a number of options for defrauded investors to recover their investment losses. Some examples of these options include:

  • Disgorgement and Fair Funds – When the SEC pursues enforcement actions against firms, brokers, advisors and others suspected of defrauding investors, it can require disgorgement of unlawfully-obtained funds, and it can impose additional monetary penalties. In some cases, amounts recovered in SEC enforcement actions will be distributed to aggrieved investors.
  • Receivership – In some cases, the SEC may ask the court to appoint a receiver to protect funds held by an entity or individual that is under investigation. If the investigation leads to an enforcement action, these protected funds may then be distributed to defrauded investors.
  • Securities Investor Protection Corporation (SIPC) – The Securities Investor Protection Corporation (SIPC) is a federal entity that insures investor funds held by member broker-dealers. If your broker-dealer is an SIPC member and it goes out of business after being accused of fraud, you may be able to recover up to $500,000 of your lost assets through the SIPC.

Importantly, however, the SEC also warns that “It is important to understand that not all harmed investors will be able to recover money. Investors who do recover money may receive substantially less than their losses. In addition, even when harmed investors are able to recover money, the process for distributing the money to harmed investors may take a long time.”

Hiring an Attorney to Pursue Arbitration or a Lawsuit on Your Behalf

Due to these limitations on the recovery options that are available through the SEC, if you have suffered fraudulent investment losses, in most cases it will make sense to hire an attorney to pursue FINRA arbitration or file a lawsuit on your behalf. By hiring an experienced securities fraud attorney to represent you, you can ensure that your case is being handled (you do not have to wait and see if the SEC takes action or if your broker-dealer goes out of business), and you can seek to fully recover your fraudulent losses. At Zamansky, LLC, we handle most cases on a contingency-fee basis, so our clients pay nothing out of pocket for our representation.

Contact Us to Learn More About Recovering Your Fraudulent Investment Losses

If you would like to speak with an attorney about pursuing a claim for investment fraud, we encourage you to get in touch. To schedule a free, no-obligation consultation as soon as possible, call 212-742-1414 or request an appointment online now.