What to Do if You are a Victim of Financial Fraud

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Even if you are not familiar with the subject of securities fraud, you’re probably familiar with the Bernie Madoff scandal. Bernie Madoff falsely represented his company and gained more than 51,400 investors. Instead of reinvesting the money to help his clients’ investments grow, he created the most enormous Ponzi scheme in the world. His investors unwittingly gave their money to nothing but the paychecks of the investors before them, and so on. When the bubble finally burst, Bernie Madoff’s victims lost a collective $20 billion.


You might not have been impacted by the Bernie Madoff scandal, but being cognizant of securities fraud is important to protect yourself and recover your losses, if you ever become victim. You’ve worked hard for every dime that you’ve socked away to secure your future. It’s a distressing realization to discover that the money you’ve diligently and painstakingly set aside for investments was lost through securities fraud.

Securities fraud is a term used to describe financial crimes such as accounting scams, illegal stock price manipulation, and SEC misrepresentation. If you ever find yourself an unfortunate victim of financial fraud, knowing the immediate steps to take will give you the greatest chances of helping the authorities catch the perpetrators and your securities fraud attorneys make a case for recovering your money.

Steps to Take If You Are a Victim of Financial Fraud

  1. Collect Relevant Documentation
    Having any documentation regarding the fraud collected and organized will be the smoking gun that helps the authorities apprehend the scam artist. It also helps your securities fraud lawyer create a case to recover your money, if possible. Valuable information to gather includes:
    • Any information you have for the perpetrator. Their phone, email, and physical address. Their business name, website, licensing and and SEC regulatory numbers (if you have it).
    • Bank records that pertain to the situation. Your credit reports will also be useful in some cases.
    • An overview of the events. An intricate investment scam might span over several years. Writing out a timeline of the events, at the detail you can recollect, will help investigators get a full picture of the situation.
    • Logs of interaction you had between yourself and the scammer. Printed emails are ideal, but the date and information exchanged in phone conversations help as well.
    • Any evidence you have of fraudulent actions.
    • Police reports and any other documents regarding your case, as you file them.
  2. Research Your Legal Grounds

    There is legislation both federally and on a state level to protect you and your money from fraud. You federal rights can be found on the US Department of Justice website. To research the financial fraud laws in your particular state, contact your state’s Attorney General’s office or review their website. The North American Securities Administrators Association (NASAA) is also a valuable resource in learning your rights after becoming a victim of financial fraud.
  3. Report Your Case to Financial Regulators
    The correct regulation board to contact in regards to your claim depends on the nature of the fraud. Most cases are reviewed by the Financial Industry Regulatory Authority, and so they are a good source to start with. You can also seek direction from your business attorney if you are unsure of who to contact.
  4. Contact Law Enforcement
    In addition to involving financial regulators, you should contact law enforcement after becoming a victim of fraud. The more you advocate for yourself, the greater your ability to recover your losses. You should contact the following law enforcement entities:
    • Your local police department, especially if the perpetrator is local
    • Your local District Attorney’s office
    • Your state’s Attorney General’s office
    • The Federal Bureau of Investigation
  5. Get Representation

    In most cases, your best chance of recovering your investment will be through civil litigation. Having a financial advisor attorney on you side will help you navigate the process and give you the greatest odds of recovering the money you lost.
  6. Take Care of Yourself

    In addition to your financial loss, you are probably experiencing a range of emotions. You might feel stressed, anxious, depressed. Your well-being should be your greatest priority while sorting out the aftermath of your fraud. Get involved in a support group and talk to a councilor. You are not in this alone.

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