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“A Recovery Checklist For Victims of Investment Fraud”

This week FINRA published a Recovery Checklist for Victims of Investment Fraud and at the risk of being called sensitive, it seems the Checklist seemed to omit, at least on its face, that hiring an attorney may be the most direct route to seeking any compensation that may be due from being a victim of a financial crime or a victim of investment fraud.  Granted, if you click through to the embedded links, you will find another page published by FINRA titled “Legitimate Avenues for Recovering Investment Losses.”  Therein you will find FINRA’s suggestion that “…You may want to hire an attorney to represent you during the arbitration or mediation proceedings to provide direction and advice.”  I guess it is nice to be considered a “legitimate” avenue by FINRA, as any suggestion of illegitimacy would not sound quite as nice.

But back to the “Checklist.”  FINRA provided a number of resources to report the crime, and victims of investment fraud and financial crimes should report these crimes to all appropriate agencies, as those agencies represent the only real process that can (whether they will is a different issue) bring criminal or regulatory charges against the perpetrator.  However, it is in my experience rare that the authorities responsible for enforcing the criminal and regulatory statutes will recover the victim’s damages, although it certainly happens from time to time.  That is not their real responsibility–they want to enforce the criminal laws and regulations and put deserving criminals behind bars or revoke licenses.  Yes, recovery will sometimes be the product of criminal enforcement, but hiring someone that has no purpose other than representing the victim in seeking the appropriate recovery is wise.

I am glad FINRA acknowledges that the damage done by investment fraud not only includes the damages from financial loss, but also includes  “…at least one severe emotional consequence—including stress, anxiety, insomnia, and depression.”  These damages are real, and should be recoverable in arbitration, right?  Well, FINRA knows that it is not easy to recover from investment fraud, and states so plainly.  FINRA states, “While full financial recovery may be difficult to achieve…” and again states  “It can be difficult to recover assets lost to fraud or other scenarios in which an investor has experienced a problem with an investment. But there are legitimate ways to attempt recovery. In most cases, you can do so on your own—at little or no cost.”  Alas, is this a comment on the fairness/difficulty in recovering legitimate damages in its own arbitration forum?  Perhaps, but don’t expect FINRA to connect these dots.  But given this  admitted “difficulty”, why does FINRA seemingly encourage victims of investment fraud to go it alone?  FINRA is certainly aware of what can happen to the investor/claimant/victim proceeding on their own  against veteran Wall Street attorneys in its FINRA arbitration forum—something akin to throwing raw meat into a crowded lions’ den comes to mind.  Granted, experienced FINRA arbitrators will recognize a meritorious claim before them, but when it comes to recovering money from investment fraud, don’t go it alone!

Yes, recovering all of your damages is unfortunately difficult, and kudos to FINRA for acknowledging the legitimacy of damages greater than the obvious financial loss.  Victims should be encouraged to seek help from someone advocating solely for the victim’s rights AND seeking a recovery of all damages?  I am all for the appropriate penalties being pursued by our government and regulatory prosecutors, but hoping the government will recover your money is not a very proactive process, and may not be a real strategy.

Victims of investment fraud can find competent attorneys to provide them specific advice on these issues.  In fact, there is an association of attorneys dedicated to representing victims of investment fraud called the Public Investors Arbitration Bar Association (PIABA).  In fact, you will find the link to PIABA if you click through enough embedded links in the FINRA materials, and PIABA offers a great deal of information that may be worthy reading for someone that may find themselves a victim of investment fraud.

Don’t go it alone; get someone to help you through this difficult process in your effort to recover your damages. Hire a competent attorney to advise what may be your best strategy….it won’t likely rely on just hope that the government will recovery your damages, and it won’t likely be to “go it alone” in a FINRA arbitration.

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