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Friday, December 4A Lawyer Blog...!
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Frauds and Scams: What are Your Legal Options as an Investor?

Investors are often defrauded out of their hard-earned money by scammers, con artists and, sometimes, even seemingly legitimate companies. While most of them would not be able to do so with large companies, they target smaller investors. Unfortunately, they fall easy prey to such scams and frauds due to inexperience and/or a lack of knowledge.

If you find yourself defrauded as an investor, or at least believe that to be the case, know that everything is not over just yet. There are strong legal options that you can take to fight back. Read through as we discuss some of the powerful legal steps that investors can take if they suspect forgery or noncompliance.

Consult with a FINRA Arbitration Attorney

FINRA stands for Financial Industry Regulatory Authority, which is an extremely powerful, independent organization. They are neither a part of the government, nor any other private organization, but hold tremendous influence in matters of brokerage, investments and associated matters. Although watched over by the Securities and Exchange Commission, the establishment is responsible for:

  • Creating regulatory laws for all registered broker-dealer firms that are operating within the jurisdiction of the United States
  • Surveying and auditing suspected firms for forgery or noncompliance, in accordance with the above laws
  • Implementing the laws and executing the legal repercussions, as is fit for the specific situation
  • Creating awareness among investors and promoting transparency in investment schemes
  • Facilitating the informal resolution of disputes between investors and broker/dealers with the help of their arbitrators

If you feel that you have been defrauded or misled, consult with a FINRA arbitration attorney to prepare the winning argument against the fraudulent/noncompliant party. If you do have a strong case, any decision taken in your favor by the arbitrators during the arbitration process will be legally binding for the defendants. The investors do have the right to challenge the arbitrators’ decision in a court of law, and we will get to that next.

Taking It to the Court

If the FINRA arbitration decision does not go in your favor, then you have a right to seek help from the judicial system and challenge the decision the arbitrators took. This does not apply to the brokerage – dealership firm though.

To challenge the decisions made by a FINRA arbitration committee, the decision must be challenged in accordance with any one or more of the following grounds:

  • The arbitration committee did not conform to their legal duties and standards as was expected from them
  • The arbitration committee’s decision does not make any rational or legal sense
  • The members of the committee were forced into taking an unfair decision (via threat, violent acts, blackmail, etc.)
  • The arbitrators were corrupted, biased and/or bribed

Suing them Directly

Although it is possible to sue a fraudulent or noncompliant company directly, it may not always be the most ideal course of action to take. Eventually, FINRA will get involved as they are in charge of such claims nationally, and chances are that the court may advise the claimant to go through a FINRA arbitration first anyway.

Now that you have a basic understanding of the situation, note that time is of the essence. Even if you do not file a case or contact FINRA immediately for an arbitration, it never hurts to consult with a FINRA arbitration lawyer as soon as possible.

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