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Investor Lawyers Representing Victims of Mutual Fund Fraud Nationwide
Investing in mutual funds is supposed to be a relatively safe and conservative way to diversify your investment portfolio. Your investment broker or advisor is supposed to recommend mutual funds based on your best interests, and you are supposed to have full transparency into the costs and risks of investing.
Unfortunately, while all of these are supposed to happen, in many cases, they do not.
If you have experienced substantial losses through your investments in mutual funds, you may be a victim of fraud. Mutual fund fraud can take many different forms, and, far too often, investors do not realize that they are victims of fraud until it is too late. If you are a victim, you may be entitled to recover your fraudulent mutual fund losses in securities litigation, and we encourage you to speak with an investor lawyer at Zamansky LLC about your legal rights.
When Do You Have a Claim for Mutual Fund Fraud?
Determining whether you are a victim of mutual fund fraud requires a critical assessment of the circumstances surrounding your investment in the mutual fund(s) in question. This includes the timing of your investment(s), the information and materials you received, and the fees your investment broker or advisor earned as a result of his or her recommendation—among other factors.
With this in mind, some examples of mutual fund fraud include:
Material Misrepresentations and Omissions Concerning Mutual Fund Risks or Costs
As an investor, you have the right to make informed decisions about where you choose to put your money. If your investment broker or advisor misrepresented or omitted material information about the risks or costs associated with investing in a mutual fund, you may have a claim for fraud.
Among other things, this includes failing to adequately disclose the varying risks and costs associated with investing in Class A and Class B shares. Class B shares typically have higher associated costs, and you are entitled to consider these costs when deciding whether to invest.
Material Misrepresentations and Omissions Concerning Fees or Commissions
Material misrepresentations and omissions concerning an investment broker’s or advisor’s financial interest in your investment can constitute fraud as well. This includes (but is not limited to) failing to disclose the fees or commissions your investment broker or advisor stands to earn if you invest.
Making investment recommendations based on what is best for an investment broker’s or advisor’s own financial interests is a form of self-dealing, and it is a clear form of investment fraud. Various forms of evidence may be available to prove your claim, and our lawyers can work to gather this evidence through all available legal means.
Excessive Trading and Mutual Fund “Switching”
Along with failing to adequately disclose fees or commissions, investment brokers and advisors can also be held liable for investors’ losses when these losses result from excessive trading. Mutual funds are generally long-term investments, and, as a result, excessive trading is generally a red flag. If your investment broker or advisor executed trades on your account for the purpose of generating fees or commissions, you may have a clear claim for mutual fund fraud.
Mutual fund “switching” is a related practice that is also prohibited under federal securities laws. Switching, which involves selling an investment in one mutual fund to invest in another similar one for no clear reason (other than to generate fees or commissions), can provide clear grounds for investors to take legal action as well.
Making Mutual Fund Investment Recommendations Based on “Break Points”
“Break points” are levels at which the commissions for selling mutual fund shares drop based on volume. Generally speaking, the larger an investor’s stake, the lower the commission. If an investment broker or advisor recommends investing in multiple mutual funds below their break points in order to maximize the broker’s or advisor’s commissions, this can also give rise to a claim for mutual fund fraud in securities litigation.
As with other forms of mutual fund fraud, determining whether your broker or advisor has improperly made investment recommendations based on breakpoints can be challenging. Our lawyers know what to look for in these cases, and we determine whether a mutual fund fraud claim is warranted.
Unsuitable Investment Advice (Including Recommending Investments in Alternative or Exotic Funds)
Mutual fund fraud cases can also involve claims based on unsuitable investment advice. This includes (but is not limited to) claims based on recommending investments in alternative or exotic funds, which are not well-suited to most retail investors. These funds present unique risks, and thoroughly understanding these risks is critical for making informed investment decisions.
If you unknowingly invested in a high-risk fund, such as a concentrated fund or focus fund, you may be entitled to recover your losses from your investment broker or advisor. In this scenario, you should collect any documentation and written communications you received from your broker or advisor about the fund, and you should have these available during your free initial consultation.
We Provide Contingency-Fee Representation for Mutual Fund Fraud Claims
If you believe that you are a victim of any of these forms of mutual fund fraud—or if you aren’t sure why you are facing unexpected investment losses—our lawyers can assess your situation and help you make informed decisions about your next steps. If you have a mutual fund fraud claim, we can promptly take appropriate legal action on your behalf. We represent defrauded investors on a contingency-fee basis, which means our legal fees (if any) will be calculated as a percentage of the losses we help you recover.
Discuss Your Mutual Fund Fraud Claim with an Investor Lawyer at Zamansky LLC
Do you need to know more about filing a claim for mutual fund fraud? If so, we encourage you to contact us promptly. To discuss your legal options with an experienced investor lawyer at Zamansky LLC in confidence, call 212-742-1414 or request a free initial consultation online now.