Learn The Do’s And Don’ts That Maximize Your Odds For Investment Recovery After Investment Fraud Strikes
- Why you must speak up when investment fraud occurs.
- Contact information for the regulatory services that handle fraud complaints.
Prevention is your best defense against becoming an investment fraud victim, and there are numerous articles on this site educating you on how to avoid investment fraud.
However, if you’re reading this article, it's likely too late for that message.
The typical first response to realizing you're a victim of investment fraud is a combination of anger and embarrassment. You got a raw deal and it doesn't feel good.
“One ought never to turn one's back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger in half.” – Sir Winston Churchill
You may be tempted to sweep the mistake under the rug and get on with your life by putting it all behind you.
That’s a mistake…
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You're Not the Only Victim of Fraud
You’re unlikely the only victim, and every day the investment fraud goes undetected, more people will be hurt by it.
By complaining to authorities as quickly and loudly as possible, you're doing your best to fight back against the con man while also increasing your chances of recovering any lost money.
It’s not a perfect solution, but it’s the best you can do under the circumstances.
You might be pleasantly surprised to learn that according to Bruce Sankin, an auditor and mediator for NASD, “91% of investors who knew their rights and first mediated and then arbitrated recovered part or all of their investment losses.”
That’s a valuable and worthwhile statistic to know. It should be highly motivating to take action if you believe you're a victim of investment fraud.
However, to understand the above quote, it's important to create a distinction between stock broker fraud at a legitimate firm and investment fraud by the firm itself. Each requires a different course of action to seek remedy.
How to Report Fraud
If you're facing stock broker fraud within a legitimate firm, then your first step is to complain, in writing, to the broker first and the branch manager second.
Related: How Your Financial Advisor is Taking 75% of Your Retirement Income (or More!) Video, PDF download, or Audio.
People who follow this procedure are the ones getting the results Bruce is citing above.
However, there are times when the whole company is crooked. In that case, pursuing corrective action within the same firm is not likely to work.
It makes more sense to turn to the regulators for additional help.
Below is a list of regulatory resources for filing investment fraud complaints when your grievance with the offending firm isn't getting resolved:
- Securities and Exchange Commission: Email to [email protected], fill out the online complaint form, fax 202-772-9235, or mail to SEC Complaint Center at 100 F Street NE, Washington, D.C. 20549-5990. You can also call them at 202-551-6551.
- State Securities Regulator: Visit the national web site at http://www.nasaa.org for local regulators and an online complaint form or call 202-737-0900. You can email at [email protected] .
- National Association of Securities Dealers regulatory branch (NASDR) now called FINRA for Financial Industry Regulatory Authority: http://www.finra.org, online complaint form, or call 800-289-9999.
- Federal Bureau of Investigation (FBI): You can find local offices on their web site at http://www.fbi.gov
- Better Business Bureau: http://www.bbb.org
- Your local District Attorney’s Consumer Protection Unit
- Your local Postal Inspectors Office if mail was used as part of the investment fraud process
“Your only obligation in any lifetime is to be true to yourself.” – Richard Bach
Remember, con artists can’t get prosecuted and your money can’t get returned if you don’t speak up. You don’t want the con man to get away with it, do you?
The sooner you contact these resources, the greater the likelihood that you'll stop the investment fraud from victimizing another person like yourself.
Help others while helping yourself by complaining promptly.
Who knows, you might even get some of that lost money back…
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If you invest, then it’s a near certainty you’ll encounter investment fraud. Nobody is immune.