Securities Fraud a Betrayal of Trust

San Francisco, CAIt is not just about the money, although the money is a very important issue. Securities fraud is about the lies that are told to get that money. For victims of securities fraud an important issue is the betrayal of trust. Of course, there is always the issue of money when one talks about stock fraud. Whenever a person invests in stocks and securities it is to make money--not to hand it over to an unscrupulous individual who turns around and uses that money for his own gain.

But, putting the issue of money aside for a moment, the betrayal of trust can be an important issue to victims of securities fraud. Many investors get to know their advisors well. Some advisors are trusted friends, who know their victims well before they ever take a dollar from those investors. Others become close while acting as financial advisor to their investors. Then, they mention a "hot tip" or a "sure thing" that turns out to be a bad deal. Still others run their own funds--scams, if you will--and encourage friends and friends of friends to invest with those funds.

The important thing when you have a financial advisor is that you trust that person. Without trust, you would never leave your money with that advisor--why would you? The problem is that these scam artists use that trust to prey on investors. They use their knowledge of the financial world to make it look like they are the real deal, when in fact they are only out to make an easy fortune.

So, you trust your investment advisor when he tells you about a good investment or when he encourages you to invest with him. When he tells you there are additional fees to pay, you trust that those are legitimate fees, rather than another easy way for him to get a few extra dollars out of you. When he tells you the investment is doing well, you have no reason not to believe him, because you trust him to do right by you--and do the right thing with your money.

Owen G. (not his real name) says he was scammed by a company and lost over $100,000 because of lies he was told. "[The company's] investor relations person called me to invest in the company. I wired over $100,000 based on things he told me about the company. They were all lies. He told me the stock would not be restricted. It was restricted for over a year while all its value disappeared. He also scammed me for thousands more through Western Union, saying there were fees I had to pay."

But, in the end, the most important issue is the lost money. People invest hoping to make some money, not to lose it all. Yet all too frequently they do lose their money to someone who wanted that money for himself. They lose the principle, often their life savings. They lose the money they saved through years of hard work and careful planning. They lose money that was meant for their retirement--to help them in their golden years. They lose money that was meant for their children or their grandchildren. They lose anywhere from $1,000 to $10,000,000, depending on how much they invested. No matter how much they lose, it is too much.

No one should have to suffer financially because of another person's dishonesty. It is just not right. Too many investors are left financially devastated by the unethical actions of another person; by a person who has helped himself to something that is not rightfully his.

So, what are they to do? Talk to a lawyer. Find out if there is any way of recovering that lost money. Chances are, they lost too much money to recover it through work and investments. However, there is a chance, a good chance, that they can get that money back through either a lawsuit or an arbitration. Of course, you can't ever be compensated for the betrayal of trust--but you can be compensated for money that was taken from you.