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Recognizing common signs of securities fraud

Investment is naturally rife with risk, but risk and fraud are not the same. We often advise investors regarding the difference.

Many investors do not even think about potential misconduct until it is too late. Of course, the market naturally fluctuates, so losing money in your investments occasionally is normal and does not indicate fraud. However, huge investment losses should concern you and give you reason to investigate the possibility of fraud.

What are some potential signs of securities fraud?

The problem with these indicators is that, again, just because they exist does not mean fraud is occurring. For instance, a broker who does not return your phone calls could potentially be evidence of fraud, or simply a sign your broker is busy.

Instead, concern yourself with your individual financial statements. Many people do not thoroughly read their statements, and this is a major mistake. If anything appears on your statement that does not make sense, contact your broker immediately and ask for an explanation. Particularly if you notice strange debits or credits, it is imperative you follow up.

Additionally, notice when you are paying capital gains taxes and how much those taxes are. If you are paying capital gains taxes but the value of your investments is going down, this could potentially signal trouble.

How can I prove fraud?

A fraud case requires the investor to prove a broker or somebody else intentionally misrepresented facts that the investor used to make investments and suffered loss as a result. Find an attorney who understands and can advise you on the nuances of securities fraud.