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Registered Advisors, Oil & Gas Investment Programs Top List for Fraud Enforcement

October 12, 2016 Blog

In September, the North American Securities Administrators Association (NASAA) released its 2016 Enforcement Report, highlighting the results of state securities fraud enforcement efforts during 2015. The 2016 Enforcement Report highlights some alarming trends that are particularly noteworthy for individual investors.

Key Statistics from NASAA’s 2016 Enforcement Report

#1: Registered Advisors Were Targeted More Frequently Than Unregistered Individuals

While failure to register with the appropriate state securities authority or the Securities and Exchange Commission (SEC) is often a red flag for investment fraud, NASAA’s data from 2015 show that more registered advisors faced enforcement actions last year than unregistered individuals and firms. The numbers were close – 812 registered advisors compared to 791 unregistered parties – but this goes to show that even seemingly-reputable advisors can (and do) commit fraud.

#2: Oil and Gas Investment Fraud Remains a Significant Concern

We have recently highlighted the risk of oil and gas investment fraud scams for individual investors, and NASAA’s data show that these scams are indeed a significant concern. Oil and gas frauds were the third-leading type of investment fraud in 2015 in terms of prevalence, following Ponzi schemes and fraudulent real estate investment programs.

#3: Investment Fraud Scams Run the Gamut

Along with oil and gas investment frauds, Ponzi schemes and real estate investment frauds, investors lost money in 2015 to a wide variety of other types of scams as well. Among the other frequently-cited forms of investment fraud were:

  • Internet fraud
  • Affinity fraud
  • Frauds involving variable and indexed annuities, hedge funds and structured products

#4: Investors’ Fraudulent Financial Losses Exceed $500 Million

According to the 2016 Enforcement Report, state securities agencies ordered repayment of more than $530 million of investors’ funds that were lost due to fraudulent practices in 2015. However, considering that (i) the report addresses state-level enforcement only, and (ii) not all frauds are discovered, this means that investors’ total losses far exceeded this amount.

Consider this: The Securities and Exchange Commission (SEC) reports that the total monetary relief recovered for investors as a result of the financial crisis alone (which would not include many categories of losses, such as those from fraudulent oil and gas investment programs) stood at nearly $2 billion as of January 2016.

#5: Elderly Investors Remain a Primary Target for Investment Fraud

Finally, NASAA’s data show that elderly investors were once again a primary target for fraudulent investment schemes in 2015. According to NASAA, nearly one out of every three investment scams in 2015 targeted senior citizens. The 2016 Enforcement Report notes that scams targeting groups based upon race, religion, profession and other affinities were prevalent in 2015 as well.

Zamansky LLC | Investment Fraud Attorneys for Individual Investors Nationwide

The attorneys at Zamansky LLC provide nationwide legal representation for individual investors who are victims of fraud. If you lost money in an oil and gas investment program or other fraudulent scheme, we may be able to help you recover your losses. For more information, call (212) 742-1414 or contact us online to schedule a free consultation today.