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SEC, FINRA Seek Penalties for Investment Fraud Scams Targeting Vulnerable Investors

January 12, 2018 Blog

For individual investors, the risk of losing money to corporate fraud and fraudulent investment scams is a very real concern. While some fraudulent schemes target individual investors generally, many focus on bilking funds from investors who are considered to be particularly vulnerable to fraud.

In one recent example, the Financial Industry Regulatory Authority (FINRA) barred a New York-based investment broker after concluding that he was responsible for causing an elderly widow to lose more than $175,000 over a three-year period while collecting over $200,000 in trading commissions. According to FINRA, the widow was blind, required in-home care, and had entrusted the broker to manage her finances on her behalf. The fraud began shortly after her husband’s death, and the broker had previously managed the couple’s investments for 20 years.

In another recent case, the Securities and Exchange Commission (SEC) has accused a broker and his investment firm of raising $3.4 million from investors through the sale of unregistered securities. After the SEC refused to grant an exemption for one investment product the broker wanted to offer, he sold another similar product without obtaining an exemption or registering with the SEC. The investment – an unsecured promissory note – was a complex and risky product that was not suitable for unsophisticated investors, yet the broker allegedly targeted individuals who lacked the information and experience needed to make an informed investment decision.

Ways to Protect Yourself Against Investment Fraud

As an individual investor, it is important to be wary of the risk of fraud and take proactive measures to protect your portfolio. This includes doing your research, making sure you understand your investments and reviewing your investment account for suspicious transactions on an ongoing basis. For more information, we encourage you to read:

If you suspect that you or a loved one may have lost money due to investment fraud, you may be able to recover your losses, and you should speak with an attorney as soon as possible. FINRA arbitration provides a way for defrauded investors to recover their losses, and an experienced attorney will be able to help you pursue a claim against your broker or advisor. Arbitration is similar in some ways to a court proceeding; however, the process is generally quicker and less cumbersome, and FINRA arbitrators are intimately familiar with the types of fraud schemes that can lead to investor losses.

Speak With a FINRA Arbitration Attorney in Confidence

If you would like to speak with an attorney about seeking to recover your investment losses through FINRA arbitration, you can contact our investment fraud law offices for a confidential consultation. To schedule an appointment with one of our experienced attorneys, please call (646) 663-5628 or tell us what happened online today.