If you’re like most people, when you hear the words “securities fraud” or “estate litigation,” your eyes glaze over. The average American isn’t generally concerned with the insider lingo of financial investment, or investment law.
On the other hand, most people recognize the name Bernie Madoff. Madoff was once a hugely successful investment manager and served as the chairman of the NASDAQ stock exchange. That is, he was thought to be wildly successful until December of 2008, when he was arrested for running the largest known Ponzi scheme to date and losing his customers close to $20 billion dollars.
Ponzi schemes are a form of complex investment fraud in which an extremely high rate of return on investment is achieved not through investment, but by paying returns to investors out of newly invested capital. This kind of scheme works very well, as long as new investors keep coming. Madoff was exposed because investors stopped coming, and he ran out of money with which to pay returns.
The complexity of even well-known cases of securities fraud leads many people to leave such things to litigation attorneys and stockbroker fraud lawyers. This is wise. The problem is, for most people with only a layperson’s understanding of investment banking, estate planning, and other financial professions, fraud is not necessarily obvious. Securities fraud (also known as investment fraud or stock fraud) is generally described as a deceptive practice in which false or misleading information causes investors to make a purchase or sale decision, resulting in large financial losses. In 2014, there were 1,639 pending securities fraud cases pending decisions by the Financial Industry Regulatory Authority (?FINRA?), the regulating body in charge of arbitrating claims of fraud.
Securities brokering is a highly lucrative business. In 2015, the payroll wages for securities brokerages in the United States topped $63 billion dollars. This is no chump change. Any time sums of money of that volume are changing hands, there are potential incentives to bend the rules to reap financial rewards. Fortunately, litigation attorneys exist who specialize in administering this type of case. Stockbroker fraud lawyers deal specifically with the cases mentioned earlier, but there are also estate planning attorneys and financial advisor attorneys who help prevent fraud from taking place.
Anyone looking to invest money through a brokerage certainly doesn’t anticipate dealing with securities fraud, or misinformation from their financial advisor. Unfortunately, the more money there is to be made, the more likely it is that laws will be bent or disregarded completely. It can be comforting to remember that whatever happens, litigation attorneys of all different specialties ensure that fiscal accountability exists, and justice continues to be upheld.
