Investment Fraud and Dealer Supervision Claims

You may have been deceived. The person who took your money may not be the only party responsible.

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Investment fraud can wipe out savings, retirement funds and family security.

It can also leave the victim feeling embarrassed or ashamed.

That reaction is exactly what fraudsters rely on.

Led by Harold Geller and Matthew W. Taylor, the Sotos Investor Protection Group helps investors assess fraud losses and determine whether an advisor, dealer, bank, financial institution or another party may also bear responsibility.

You do not need to prove the fraud before contacting us.

Start with how you were approached, who was involved, where the money went and what happened when you tried to get it back.

What Is Investment Fraud?

Investment fraud involves false, misleading or deceptive conduct used to obtain an investor’s money.

It may involve a completely fake investment.

It may also involve a real company or product that was sold using false information, hidden conflicts or improper promises.

It may involve investments in troubled companies where the advisor’s earlier investments are at risk.

Examples may include:

Ponzi schemes;
pyramid schemes;
fake private investments;
fraudulent real-estate or mortgage investments;
impersonation of an advisor or company;
cryptocurrency scams;
romance and investment scams;
affinity fraud;
pump-and-dump schemes;
forged documents;
unauthorized transfers;
misuse of investor funds;
false account statements;
investments sold by an unregistered person;
investments sold where the advisor has a conflict of interest, and
off-book investments promoted through a registered advisor.

Warning Signs of Possible Investment Fraud

Warning signs may include:

unusually high or guaranteed returns;
promises of liquidity when you need your money;
claims that there is little or no risk;
pressure to invest immediately;
requests to keep the opportunity secret;
instructions to send money through unusual channels;
money directed to a personal account;
difficulty confirming who owns or operates the investment;
inconsistent documents;
account balances that cannot be independently verified;
repeated demands for additional money;
excuses when you try to withdraw;
requests to pay taxes or fees before funds are released;
investments that do not appear on your normal statements; or
someone offering to recover earlier losses for an upfront fee.

Advisor Impersonation and Online Investment Scams

Fraudsters may impersonate:

financial advisors;
banks;
investment dealers;
regulators;
well-known companies;
legitimate investment platforms;
regulators; or
so-called asset recovery companies.

They may use:

cloned websites;
fake social-media profiles;
text messages;
messaging apps;
online advertisements; or
false account dashboards.

Cryptocurrency Investment Fraud

Cryptocurrency scams may involve:

fake trading platforms;
fraudulent investment managers;
romance scams;
promises of guaranteed crypto returns;
requests to transfer crypto to private wallets; or
false account balances showing profits that cannot be withdrawn.

Cryptocurrency transactions can be difficult to reverse, but transaction records may still be important evidence.

What Should You Do After Suspected Investment Fraud?

Consider taking steps to:

stop sending additional money;
preserve emails, texts and documents;
take screenshots of websites and online accounts;
record banking and transaction information;
preserve cryptocurrency wallet information;
contact your financial institution;
secure compromised accounts and passwords;
report the matter to appropriate authorities; and
obtain advice about possible civil recovery.

Do not delete messages simply because they are upsetting or embarrassing.

They may be important evidence.

When Can a Dealer or Financial Institution Be Responsible?

The fraudster may have disappeared, spent the money or moved it outside Canada.

That does not necessarily mean there is no possible claim.

Depending on the facts, another party may have failed to:

supervise an advisor;
respond to suspicious activity;
investigate warning signs;
review outside business activities;
stop unauthorized transfers;
identify repeated complaints;
conduct proper product due diligence;
prevent an advisor from selling unapproved investments; or
respond properly after the fraud was reported.

Investment dealers are responsible for the acts and omissions of their advisors, whether the advisor is an employee or a so-called independent contractor.

A review may consider what the institution knew, what it should have known and what role it played.

Off-Book Investments

An advisor may recommend an investment that does not appear on the firm’s approved product list or regular account statements.

The advisor may say:

it is a private opportunity;
the firm does not need to be involved;
payment should be made directly;
only selected clients have access;
the advisor will guide you or advise you, or
the advisor is investing personally.

These circumstances may justify closer review.

Dealer Supervision Failures

A financial firm may have responsibilities relating to:

advisor supervision;
outside activities;
product approval;
suspicious transactions;
client complaints;
account security;
fraud;
a pattern of rule breaches;
compliance.

A fraud claim may therefore involve more than the person who directly committed the wrongdoing.

What Evidence Can Help?

Useful records may include:

bank statements;
wire-transfer records;
cryptocurrency transaction records;
account statements;
emails and texts;
social-media messages;
screenshots;
websites and advertisements;
contracts;
brochures;
account-opening documents;
advisor business cards;
recordings;
police or regulatory reports; and
complaint correspondence.

Write down the timeline while it is fresh.

Record who approached you, how the investment was presented and where the money was sent. Note whether a registered advisor or firm was involved and whether other investors may have been affected.

What Recovery Options May Be Available?

Depending on the circumstances, recovery may involve:

claims against the person responsible;
claims against an advisor or dealer;
claims involving a bank or another institution;
asset preservation or tracing;
insurance;
civil litigation;
insolvency proceedings;
a coordinated group claim; or
a class action.

Explore Investment-Loss Recovery Options

Investor Protection Experience, Backed by Litigation Strength

Harold Geller brings more than 30 years of investor-protection, financial-services and complex-product experience.

Matthew W. Taylor brings complex investment, securities and class action litigation experience, particularly where losses affect many investors or involve several potential defendants.

Frequently Asked Questions

Can I recover money lost to investment fraud?

Possibly.

Recovery may depend on where the money went, whether assets remain and whether another responsible party was involved.

Do I need criminal charges before starting a civil claim?

Not necessarily.

Criminal and civil proceedings are different processes.

What if a registered advisor introduced the investment?

That may be important.

A review may consider whether the advisor used the trust created by the advisory relationship and whether the supervising firm knew or should have known.

Can a dealer be responsible for an advisor’s outside investment?

Possibly.

The answer may depend on supervision, policies, warning signs and the way the investment was presented.

Should I pay someone who says they can recover my losses?

Be cautious.

People who have already lost money can be targeted again by recovery scams.