Investor Fraud FAQs
1. What is Securities
Law?
Securities Law involves the rules and regulations that
regulate the issuance and the sales of securities. The
Securities Act of 1933 and the Securities Exchange Act of
1934 are major aspects of this type of law. Securities
Fraud occurs when an individual or entity attempt to
illegally manipulate the investment market. Securities
fraud may be committed by brokers, financial advisors,
corporations, and private investors.
2. What is insider
trading?
If a person buys or sells stock in a publicly traded
company based on non-public information that they have
about that company, it is considered "insider
trading" and is illegal.
3. How does a securities
broker get paid?
The broker will earn his income based on a commission.
4. What are the duties
of a broker?
Brokers provide financial background of a company, the
rate of commission, and other important facts that a
client should know before they buy or sell stock.
5. How do I know if I
have been defrauded?
Suspicious activity on the part of a broker may include:
- Several account statements showing transactions that you did not make
- Unidentifiable debits or credits on monthly statements
- Losing money when the market is up
- Loss of money in the majority of investments recommended by your broker
If you believe you have been defrauded, contact Epperly & Follis, P.C. today.
6. What can I do if I
think I have been defrauded?
The National Association of Securities Dealers (NASD) and
various state securities divisions offer a formal
complaint process to investors, with the filing of a
complaint triggering an investigation of the broker. If
the investigation proves that the broker has engaged in
any unlawful practice, the broker will be subject to
formal disciplinary action.
Disputes between investors and their brokers are generally subject to the arbitration process because most brokerage firms use an arbitration agreement when you sign up for their services. Don't let this prevent you from contacting an attorney or thinking you can't file a lawsuit, because this is not always the case.
7. How much can I expect
to recover if I go to arbitration?
Investors may be awarded out-of-pocket losses, reasonable
attorney fees, interest on the losses, and punitive
damages. The exact amount that you recover varies in each
case.
8. How much will it cost
to hire an attorney?
Most attorneys are hired on a contingency-fee basis, which
means that the attorney recovers fees only if you recover
a judgment in the case. The fees that they recover are
usually a percentage of your award.
9. What is corporate
fraud?
When a corporation deliberately conceals information to
appear healthy and successful before its shareholders, it
has committed corporate or shareholder fraud. Corporate
fraud may involve a few individuals or many, depending on
the extent to which employees are informed of their
company's financial practices. Fraud committed by
corporations can be devastating, not only for outside
investors who have made share purchases based on false
information, but for employees who, through 401ks, have
invested their retirement savings in company stock.
10. What is investment
fraud?
Investment brokers may commit fraud in an effort to
control the market or lure more business in. The following
activities are considered investment fraud when done
intentionally:
- giving biased investment advice
- giving unfounded advice
- offering separate clients contradicting advice
- advising clients to continue an imprudent risk
- advising out of a conflict of interest