The Financial Industry Regulatory Authority (FINRA) has issued an Investor Alert warning of the growing prevalence of “recovery” scams – scams targeting those who have already lost money due to investment fraud. If you have suffered sudden and substantial losses and believe that an unscrupulous broker, investment advisor or scam artist may be to blame, it is important to be aware of these recovery scams and the warning signs of a potential fraud.
Warning Signs of a Possible Investment Loss Recovery Scam
Many of the warning signs of a possible investment loss recovery scam are similar to those for other types of investment frauds. For example, you should be wary of any person or company offering to help you recover your investment losses if:
- They contact you out of the blue. If you receive an unsolicited phone call, email, or mailing from someone offering to assist you in recovering your investment losses, this will generally be a sign of a fraud. Only a licensed attorney can represent you in FINRA arbitration or litigation; and, except in certain, limited circumstances, attorneys are prohibited from targeting individuals known to be in need of legal assistance.
- They ask for money up front. Recovery scams often make their money by soliciting fraudulent “service” fees from unsuspecting investors. If you are asked to send money or provide your bank account information before your losses have been recovered, this too may be a sign of fraud.
- They claim to be affiliated with an official organization. While recovery scam artists will often claim to be affiliated with (or even calling directly from) a government agency or other official organization, the reality is that such claims are almost universally fraudulent. Although FINRA or federal government enforcement actions may result in restitution payments to investors, there are specific procedures involved with receiving payments under these circumstances.
FINRA’s Tips for Protecting Yourself Against Recovery Scams
With these warning signs in mind, FINRA recommends that investors who have lost money due to fraud take these seven steps to avoid falling victim to a recovery scam:
- Use FINRA’s BrokerCheck website to investigate any claims that a recovery organization is registered with FINRA.
- Research online before you share any information with anyone who contacts you unsolicited. You may find that the fraud has already been reported.
- Be aware that, as a previous victim of fraud, you are now a primary target for investment scammers. Sophisticated scammers will recirculate lists of known victims in hopes of finding an easy target.
- Know the warning signs of investment fraud. Along with those listed above, high-pressure sales tactics, offers to “swap” your current investment for a profitable one, and guaranteed recoveries are all likely signs of a recovery scam.
- Never send money by wire transfer unless you are certain you know who is on the receiving end.
- Contact FINRA or the Securities and Exchange Commission (SEC) if you have questions about whether an offer to help you recover your investment losses may be a scam.
- Learn about the legitimate investment loss recovery options that are available. In most cases, these involve hiring an attorney to represent you in arbitration or litigation.
Speak with a FINRA Attorney at Zamansky LLC
If you would like to speak with an attorney about recovering your fraudulent investment losses, please contact us for a free, confidential consultation. Zamansky LLC is a leading securities fraud law firm with highly-experienced attorneys who represent aggrieved investors nationwide. To learn more about the options you may have available, request a consultation online or call (212) 742-1414 today.