If you’re considering suing your financial advisor, you should know a few things. First, it’s important to understand the difference between financial advisors and investment professionals. Financial advisors advise on various financial topics, from saving for retirement to investing in stocks and bonds. Investment professionals, on the other hand, manage money for clients.
If you’re not sure whether your financial advisor is an investment professional, you can check with the Financial Industry Regulatory Authority (FINRA). Investment professionals must be registered with FINRA.
Once you’ve determined that your financial advisor is an investment professional, you should next consider whether you have a valid claim. To have a valid claim, you must be able to show that your advisor breached a fiduciary duty owed to you. A fiduciary duty is a legal obligation to act in your best interests. Financial advisors owe their clients a fiduciary duty.
Investment advisors often promise returns that are significantly higher than the market. This is a classic “too good to be true” scam. Although investment advisors are not obligated to offer such returns, they may take advantage of their clients’ greed and misplaced loyalty.
Any investment advisor that promises returns of over 15% is most likely a scam. Historically, the U.S. stock market has averaged 9.5%, making these claims unrealistic.
Forgery
Forgery in financial advisor fraud is a form of fraud in which a person alters an instrument such as a check, money order, or account number. The forged instruments usually contain personal information, such as a name and account number. Forgery of such documents is a serious crime.
Documents that are forgeries are considered fraudulent if the creator intends to deceive people. They must appear to have a recognizable legal significance. These documents may include government-issued documents, such as a driver’s license or a passport, or transactional documents, such as deeds or conveyances. Financial instruments, such as stocks, bonds, and currencies, may also be forged. Other documents that may be forged include wills, patents, medical prescriptions, and works of art.
Forgery charges are serious crimes that can lead to jail time and substantial fines. These crimes may also result in probation or restitution. In many states, forgery is punishable as a felony, but in some states, it is a misdemeanor.
Illegal investments
Investors need to do their homework before investing in any investment, and financial advisors who claim they can offer guaranteed, risk-free returns are likely scammers. The best way to avoid these scams is to do your own research and avoid investment advice from friends and family members. Additionally, business email compromise is on the rise, so it’s important to be very cautious when opening emails from unknown senders. You should also only provide your financial information to trusted partners.
If you have been a victim of investment fraud, you can pursue restitution. You can also file a complaint with the securities regulator and with the appropriate law enforcement agency. The sooner you report the fraud, the better your chances of recovering your money.
Hyper trading
Financial advisors who use hyper trading are not always a good bet. These advisers can generate fees for themselves by trading at higher than market levels, but this can also harm the clients. Hyper trading activity is usually accompanied by high fees, and if a firm is using proprietary investments, this can also be a red flag. Another red flag is the doctoring of investor statements.
Hyper Fund is one cryptocurrency currently floating in the market and is under investigation by the UK’s Financial Conduct Authority. It was launched in mid-2020 by the company Hyper Tech Group. It is led by Ryan Xu and uses the Multi-Level Marketing (MLM) model to entice investors with promises of high returns. This investment scheme is a Ponzi scheme.
Proprietary investments
The Securities and Exchange Commission (SEC) has charged an investment adviser with fraud and deception in the sale of proprietary mutual funds. The financial adviser used his discretionary trading authority to invest advisory clients’ funds in proprietary mutual funds without disclosing that he had a conflict of interest. The SEC filed a civil case against the adviser, seeking an injunction, disgorgement, and civil penalties. A parallel criminal action was also filed.
One of the best ways to avoid investment advisor fraud is to avoid advisors who guarantee returns above the market average. Such claims are usually not realistic, and the adage “too good to be true” usually applies. Investment advisors who guarantee 15% or more returns are likely scam artists preying on their clients’ greed. In addition, some investment advisors target groups and convince them to follow the scam.
Recovering losses from financial advisor fraud
In some instances, a financial advisor can be partially or entirely responsible for your losses. In such cases, you should consider filing a complaint with the Financial Industry Regulatory Authority. This agency oversees broker-dealers in the U.S. and may also be able to assist you in your recovery efforts.
The recovery amount varies, depending on the facts of your case, but typically you can recover the investment losses you have suffered and commissions based on the misconduct. In some cases, you can also seek attorney’s fees and punitive damages.
It is important to keep an eye out for signs that your financial advisor may be trying to deceive you. Fraud can take many forms, including complex investments and opaque investment strategies. Fraud thrives in the shadows, so it is important to be vigilant. Make sure your advisor is licensed and has adequate experience and credentials. Also, check their credentials through online resources, such as BrokerCheck. You can also look for red flags, such as a lack of account statements, receipt information, and investment performance.
