Securities Fraud Lawyers Blog
Risk-taking is a natural part of making financial investments
These should be calculated risks, though; risks based on performance projections of whatever is being invested in.
Though financial investments should not include those unforeseen or unaccounted for risks like fraud, investors are constantly facing it.
In the event that your financial investments fall prey to fraud, there are several ways to recover lost funds.
Here are 5 possible ways victims of investment scams and fraud can recover their lost financial investments.
Disgorgement Funds
If the SEC successfully charges an individual or entity with investment fraud, they may set-up a disgorgement fund. A disgorgement fund serves a away to redistribute funds to wronged parties. The SEC will order the guilty party to give-up any ill-gotten funds and assets.
Additionally, the SEC may instate monetary fines and penalties on the guilty party which may be allocated to a fair fund. Fair funds may also be distributed to wronged parties as further compensation.
Receiverships
In a lawsuit, the SEC may request the court to provide a receiver. A receiver is an officer of the court who recovers and protects assets and finances from the defendant during the case. If the SEC is found in favor, those funds held by the receiver may be distributed to investors.
Brokerage Account Protection
Brokerage account protection is a preemptive measure to insure financial investments. The SEC imposes several broker-dealer regulations that serve to protect consumers and investors.
The Consumer Protection Rule requires that broker-dealers keep customers’ cash and securities separate from their own. This ensures that an investors financial investments are readily available to be returned.
Financial investments made with broker-dealers who are members of the Securities Investor Protection Corporation (SICP) are protected up to $500,000, with up to $250,000 in cash protected.
Corporate Bankruptcy
If you are an investor in a company that files bankruptcy, you are entitled to specific rights. These rights are dependent on if your are a stock or bondholder. If you hold investments in a company that has filed bankruptcy, it may be wise to contact a financial attorney to find out what you are entitled to.
Private Class Actions
Apart from SEC-filed suits, private parties may file class action lawsuits seeking relief for lost financial investments.