Investment Scams & Fraud

The misconduct of financial advisors and stock brokers can go beyond ordinary negligence and rise to the level of intentional misconduct or fraud. Below are listed a few examples of this type of investment advisor or stockbroker scams.

Fraud, Theft And Other Wrongdoing By Brokers Or Advisors

Stockbrokers and investment advisors are legally required to place the interests of their clients before the interests of themselves or their firms. Securities fraud is a gross violation of this duty as a direct result of the broker purposefully placing his or her own needs or the needs of his or her firm ahead of what is in the best interests of his or her clients. Securities fraud can range from theft by a single broker to widespread campaigns of deliberate misinformation.

Types of investment or stockbroker fraud include:

  • Biased investment advice — A stockbroker may have a preference toward or against a specific company for various reasons, including the brokerage firm's motivation to seek fees from certain issuers and advise clients according to that bias instead of actual research results.
  • Contradictory investment advice — A stockbroker may give contradicting advice to different clients, and may purchase or sell securities in his or her own account, before effecting these same transactions for customers.
  • Continuing a risk — A stockbroker may advise clients to hold securities based on speculation or uncertain future events when the risk is apparent and the potential gain is unlikely.
  • Conflict of interest — A stockbroker or brokerage firm that has outside ties to a business may sell that business's stock, even if the investment opportunity is not the most lucrative for the client.
  • Theft — Stockbrokers who steal funds from their clients by persuading them into writing checks payable directly to the broker usually amounts to theft.
  • Toxic investments — Brokerage firms that push unsuitable, exotic and toxic investments to unsuspecting investors can be liable for securities fraud.
  • Unfounded advice — A stockbroker may persuade or discourage an investor toward or against a company, without the support of appropriate research, but instead based on unqualified or unfounded opinions of the stockbroker made without the benefit of due diligence.

Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your stockbroker fraud claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

False Information

A customer can be deceived or manipulated into buying a stock or other investment by being given false information about the investment. This leads to the investor purchasing unsuitable investments such as subprime mortgage products, private placements, annuities and other inappropriate investments. Providing false information is securities fraud. Brokers and brokerage firms have a duty of good faith in their dealings with customers. Knowingly or recklessly distributing false or incomplete information to clients is a form of securities fraud for which both the broker and the brokerage firm may be held liable.

If you have lost money because you were supplied with false or misleading information about an investment, you may have a false information claim worth pursuing. Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your false information claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

Hedge Fund Fraud

Hedge funds are not required to register with the SEC and are not subject to the same mandatory reporting rules as other investment funds. This lack of oversight creates opportunities for fund managers to easily take advantage of unsuspecting investors, making claims over and above the returns they can actually deliver. This can include enticing potential investors with false or unrealistic claims of outsized returns.

While not subject to mandated reporting rules, hedge fund managers and operators are still held to the same fiduciary duties as other brokers and can still be held liable for investment fraud.

Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your hedge fund fraud claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

Mutual Fund Fraud

Most investors understand mutual funds to be diversified investment vehicles with a high level of safety. Mutual funds are often considered a good choice for retirement portfolios for those seeking a high level of income that are safe and have little risk.

Some mutual funds subject investors to enormous levels of risk — and sometimes this risk is not disclosed to investors. Mutual fund fraud exists when brokers violate their fiduciary duty to investors by placing their own interests ahead of the interests of their clients. This often stems from a broker's actions to increase his or her commissions or fees, particularly the fees associated with each class share. Also, claims arise from brokers who were paid commissions by the mutual fund company but did not disclose these fees to clients, giving rise to a conflict of interest claim. Sometimes a broker may advise an investor to get out of one mutual fund or variable annuity and into another when it is not in the investor's best interest. This is done in some cases for higher broker commissions.

Victims of mutual fund fraud can include anyone: individual investors, retirees, small businesses, corporations, pension funds and institutional investors.

Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your mutual fund fraud claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

Ponzi And Pyramid Schemes

A Ponzi scheme pays returns to investors from their own money or money paid by later investors rather than from revenue earned by a legitimate business. The scheme is named after Charles Ponzi, who became famous for using this technique in the 1920s. He paid investors large interest payments on short-term investments with money from new investors. At the same time, he spent much of the incoming funds for personal purposes. Ponzi schemes are illegal and usually continue to operate until the scheme eventually falls apart when not enough new investors can be found.

Investors in Ponzi schemes often get hooked because early investors are paid as promised and the "returns" are usually large. These returns often result in "successful" investors spreading the word about the outsized returns, making it even easier for the purveyor of the scheme to bring in more investors. Eventually, however, the sponsor of the scheme is faced with having to pay off so many earlier investors that not enough new investors can be found, causing the entire scheme to collapse. This usually results in huge losses for participants.

A pyramid scheme is similar to a Ponzi scheme. However, in a Ponzi scheme, the promoter acts as a hub for the victims, interacting with all of them directly. In a pyramid scheme, the promoter usually doesn't interact with all additional recruits; rather, those who recruit additional participants benefit directly.

Unsuspecting investors who invest in Ponzi or pyramid schemes often suffer massive financial losses when the scheme collapses.

Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your Ponzi or pyramid scheme claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

Private Placements

Private placements are sophisticated investments involving sales of unregistered securities, which operate outside of the stock market. Small businesses sometimes issue these securities as a method of raising capital. Private placements are complex and therefore marketed to mutual funds, pension funds, institutions such as large banks and insurance companies, and sophisticated individual investors.

Claims by investors often arise when a private placement is sold to unsophisticated investors and then loses money.

Attorney Tim Van Eman has the experience and resources necessary to review, investigate and aggressively pursue your private placement investor claim. For assistance with your investor claim, call Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.

Subprime Litigation And Mortgage Scams

There are two types of subprime-related securities actions. The first consists of traditional stock-drop cases. In these cases, the financial institutions that issued subprime mortgages are being sued by their shareholders. The claim is that the defendants failed to adequately or properly disclose the risks inherent in their mortgages (such as lax underwriting standards).

A second category of subprime securities suits has been brought against businesses that issued, underwrote or advised on mortgage-backed securities. The purchasers of these instruments are claiming that the defendants failed to adequately disclose the risks of the underlying mortgages, or conducted insufficient due diligence. Some of these suits are alleging fraud on the part of the defendants, while others merely claim negligence.

If investors in subprime securities are not properly advised of the risks inherent in the securities, or their portfolios are over-concentrated in them, a breach of fiduciary duty arises.

If you are the victim of a subprime mortgage investor scam, call attorney Tim Van Eman toll free at 866-856-0433 or complete the online form for a free case evaluation. All initial consultations are free of charge.