How to identify and prove securities fraud


Most experienced investors understand that there is no such thing as a no-risk investment. Regardless of how secure an opportunity may seem, no investment has an absoblute guarantee against loss. So how can one prove that a loss was the result of securities fraud rather than a natural outcome of investing? Understanding the initial signs of securities fraud can help.

When working with brokers in New York, investors should expect regular and reliable contact. If a broker suddenly stops answering or returning calls, it could be a sign that fraudulent activity is going on. Discontinued contact can feel especially distressing for an investor who has spotted unauthorized transactions, transactions that do not seem to make sense or unexplained credits or debits on his or her accounts.

Once a person has identified these and other red flags and come to conclusion that fraud has taken place, he or she must be able to prove so. This type of proof usually comes down to demonstrating that a broker or other industry professional recklessly or intentionally omitted or misrepresented material facts. These actions must have then led to damages, such as significant financial losses. An investor’s prospectus usually contains information that is helpful in demonstrating this.

Investing is like a hobby for some people, while for others it constitutes a significant portion of their income streams. No matter the reasons, suffering a significant financial loss is devastating, particularly if another person’s negligence was the cause. In New York, investors who have lost sizable sums because of securities fraud can choose to pursue legal action against fraudulent or otherwise negligent brokers. Successfully pursuing a claim can yield necessary compensation for making up some of those losses.