Signs You Have an Investment Fraud Claim


Investors have the right to expect honesty from brokers, investment advisors, and publicly traded companies. The myriad of federal laws and regulations governing the securities industry are designed to protect investors from losses due to fraud, deceptive sales practices, unsuitable investment advice and other improper activities.

Unfortunately, fraud and other deceptive practices continue to occur despite the extensive rules and regulations aimed at protecting investors. For example, in recent years many investors frustrated by the low interest rates offered by bonds and CDs were sold oil and gas investments marketed as an alternative low-risk, high-yield investment. In many instances, investments in these commodities were wholly unsuitable for conservative investors and falling oil prices have resulted in losses of 50 percent or more of the investment’s value.

Luckily, there are laws that protect investors who have experienced losses due to oil and gas investment fraud or who have otherwise sustained financial damage due to a breach of fiduciary duty on the part of financial professionals. However, it is up to the individuals who have suffered these losses to know their rights and to pursue a claim for compensation. If you have experienced an investment-related loss, a financial fraud lawyer can help you to determine whether you have a claim. The red flags listed below can also provide insight as to whether you should consider contacting an attorney to initiate legal action.

Signs You Have a Claim for Investment Fraud

You may have a claim for damages caused by investment losses if:

  • A broker or financial advisor suggested unsuitable high-risk investments. Brokers and advisors are expected to know their customers and recommend investments that are consistent with their customers’ risk tolerances.
  • A broker or financial advisor engaged in churning. Excessive trading in your account can cost you money in commissions and fees and make it difficult to experience gains. Churning your account is a breach of fiduciary duty which may be actionable.
  • A broker or financial advisor executed unauthorized trades.       It is improper and illegal for a broker or advisor to make trades in your account without your explicit authorization.
  • Your portfolio was over-concentrated in a particular investment type. It is the responsibility of money managers to diversify portfolios to reduce risks to investors. When a money manager fails to properly diversify your investment portfolio, the manager may be liable if your portfolio declines in value.
  • You paid large commissions while your investments lost money. Your investment advisors or brokers may have been focused on their own commissions rather than making sound investments on your behalf.
  • High risk private placements were sold to you. Private placements routinely advertise high rates of return in offering memorandums, while downplaying risks of loss of capital. Broker-dealers should only recommend and market high risk private placements to investors who can afford the loss of capital.
  • Highly-leveraged ETFs were sold to you. Volatile markets can result in big losses with highly-leveraged ETFs (exchange-traded funds) and leveraged ETFs are inherently riskier than their un-leveraged counterparts. Only sophisticated investors who can afford to sustain losses and manage the risks of highly-leveraged ETFs should be sold this investment product.

The SEC also points to red flag indicators specific to oil and gas scams, including sales pitches promising “can’t miss” or “completely safe” wells and marketing tactics using highly publicized news items. Additionally, investors who were promised unrealistically high rates of return, and those who were sent unsolicited materials, may also have been the target of deceptive marketing and inappropriate sales practices.

Get Help from an Experienced Investment Fraud Attorney

If you suspect you were the victim of oil and gas investment fraud or any other type of stock or investment fraud, Zamansky LLC is here to help. Contact us to learn more about how we can assist you in recovering your financial losses.