Investment Disputes / Investment Fraud / Securities Fraud

Trusting people to invest your money is a big deal. Some of those who are entrusted to handle other people’s money act in the utmost good faith. Some do not. Greed is usually the reason for the difference.

There are usually two types of investment frameworks where bad situations can arise. One is where a person entrusts their money to a financial advisor or stockbroker to invest the money and grow it, such as in stocks and bonds and other investments. These are situations where the advisor is not necessarily investing your money in the advisor’s businesses, but rather in other people’s businesses, such as publicly traded companies. Bad things have happened in these situations where an advisor chooses poor investments to invest your money in, thus losing your money, or where an advisor takes too much of your money through excessive fees, churning, or outright theft. The former situations involve suitability decisions – such as whether the investment in the penny stock gamble was suited for the retired widow who needed her money preserved in more stable investments. But it is not always that extreme – it can include any choice to invest in aggressive investments when the decision should have been made not to do so. When theft is involved, sometimes those involve Ponzi schemes – where there are no returns from investments, at all, except in the financial advisor’s lifestyle. The law governs financial advisors and their duties to their clients, and they owe significant duties to their clients. If you have been the victim of an advisor’s bad decisions handling your money, you need a fiduciary litigation lawyer to help solve these problems and make things right.

Another is where a person seeks investment in their own business or the business of another. For example, a friend calls and says that they have a great opportunity to invest in an oil and gas well, for instance. They want you to invest in the oil and gas well. There has been a promise of a great return once the well is drilled, and they want your money to help drill the well. You invest money. The well is either never drilled or results in a dry hole. Or a friend calls and wants you to be a limited partner in developing an apartment complex. Once the apartment is built, there is a promise of a great return. The apartment complex is never built, or it is built and provides no return at all. There are countless other examples of investments like these – from fish farms, to medical practices, to real estate properties, to partnership interests, to investment properties, etc. Oftentimes people building a new company or getting into a new venture need money. They can borrow it from a bank, or they can raise it on their own. So they often turn to their friends or business colleagues and raise money for their own investments instead of borrowing the money. And whenever a business is contemplated, often the reason for doing so sounds great on the front end – invest $5000 and in five years you’ll be making $20,000/year. There are times when these investments have worked fine, and there are times when they have worked terribly. When they go bad, often the investors assume that they simply made a bad investment and that there is no recourse. But that is not always true. Whether a company is a Fortune 500 company or a person down the street, anytime investments are sold, often called “securities,” there are legal requirements that must be followed that are designed to warn and protect investors. Oftentimes investors would not have invested had necessary disclosures been provided showing the risks that were actually involved in the investment. Those raising money tend to prefer to focus on the potential rewards instead of the potential risks, but disclosure of all material facts is important so that the investor has all of the necessary information before deciding to put their money at risk. If the law is not followed, investors can be entitled to get their money back and to additional damages. If you have lost money in bad investments like these, you need a fiduciary fraud attorney to help solve these problems and make things right.