How Do I Know if My Investor is Involved in Securities Fraud?

You may be investing in securities without even realizing it. Security investments include retirement accounts, such as a 401k; college savings accounts and similar investment accounts people commonly invest in for future financial security and stability. As the volume of investments in these types of accounts continues to increase, so do the amount of fraudulent claims involving securities, many of which are done by our very own investors.

For many people, we trust our money to a financial advisor or financial company to handle our investments. It’s unlikely that we regularly check in on the status of our accounts as the majority of securities accounts are meant for long-term gain and not immediate satisfaction. Because of this, many investors may be unaware of the fraudulent activity happening with their money. If you do suspect there may be fraud going on, or worse, you experience a total or significant loss to your accounts, here are a few ways to know for sure.

Understand the common forms of securities fraud

While there are many different ways an investor can defraud a client, the majority of cases happen through these methods: insider trading, misrepresentation and accounting fraud.

Insider trading occurs when an investor or financial advisor makes illegal trades due to knowledge about the market that is not available to the public. They may receive this knowledge from an insider at that company or from a fellow financial advisor, but either way, this type of knowledge transfer is considered highly illegal and can lead to serious problems for the client.

Misrepresentation occurs when a financial advisor gives false information or misleads clients to invest in a particular entity. They may do this to benefit themselves or make quick money off your investment.

Accounting fraud occurs when a company gives false information about their finances or when a company fails to accurately keep track of their finances, leading clients to be unaware of their actual financial status.

Keep Updated on Your Accounts

While you may not be worrying about retirement for quite some time, you should always be thinking of your retirement account. If you trust a financial advisor to use your hard earned money and invest it appropriately, you should be sure to check in regularly to your accounts and make sure nothing seems out of the ordinary.

Research Investment Options

If your financial advisor suggests a certain investment, don’t automatically trust their judgment. While you are paying your advisor to do this research for you, it can’t hurt to do a little digging yourself. If an investment is legitimate, you should be able to find the right information on the company website or via public reports. You can also contact the state where the company is located to see if any complaints have been filed.

Know the warning signs

It is quite easy for victims to fall for securities fraud as the ones who convince us to invest are supposed to be the experts on our finances. But as the number of fraudulent cases continue to rise, it’s important as an investor to know the potential signs of fraud. Often, when an investment is fraudulent, you can tell by the almost unimaginable great deal. If your advisor is pushing hard for you to invest in something with “no risks” or something that seems too good to be true, it’s likely that the investment is fraudulent. Other signs are your advisor saying the money needs to be in ASAP to reap the benefits or offering perks and benefits to the investment that were never offered on previous investments.

If you are a victim of securities or investment fraud, you will need an experienced attorney to help you fight this battle and get back the money you rightly deserve. For more information about how we can help you, contact Balkan & Patterson at 561-750-9191 or visit our website.