NEW YORK (MainStreet) — Investing is hard enough without
walking into a bear trap set by an unscrupulous fraudster. Crooks create false
account statements, make wild performance claims and operate elaborate Ponzi
schemes in order to get money out of your pocket and into theirs. If you're the
victim of such a crime, what are your chances
of getting your money back?
The U.S. Securities and Exchange Commission (SEC)
recently issued an investor bulletin explaining the ways in which conned
consumers can attempt to recover assets lost to criminal investment scams. The
good news: there are a number of ways to recover your money. The bad news: you
are likely to recover only a portion of your loss – and be prepared for a
lengthy process.
"Not all harmed investors will be able to recover
money, and many of those who recover money receive less, often substantially
less, than their losses from the securities fraud," the SEC says. "In
addition, even when harmed investors are able to recover money, the process for
distributing the money to harmed investors may take a long time."
If an SEC investigation into securities fraud is
successful, enforcement action is initiated through the court system or by an
agency administrative proceeding. In addition to attempting to reclaim the
proceeds from the fraud on behalf of victims, often penalties and interest are
charged; the court or the SEC will determine the distribution of these assets.
In other cases, a receivership is formed to recover and manage the proceeds of
criminal collections. In fiscal year 2013, the SEC collected more than $1.6
billion in fines and recovered investment assets.
When a brokerage firm fails, investors' assets are
covered by the Securities Investor Protection Corporation (SIPC). Securities
held at the broker-dealer are protected up to $500,000; cash is protected up to
$250,000, but only for the value held – assets are not protected from market
loss. And this protection is only offered for customers of firms who are
members of the SIPC.
Investors who have suffered losses from fraud may also
find recourse under federal bankruptcy laws or private class-action lawsuits.
The SEC conducts hundreds of investigations each year and
says many violations pertain to the misrepresentation of investments, price
manipulation, theft, insider trading or the sale of unregistered securities. A
substantial number of these actions are spurred by tips from the public,
consumer complaints and whistleblowers. Recent scams have targeted seniors,
involved oil and gas companies, gold mining investments and speculative startup
companies. Often investors are lured into such schemes on the heels of major
news events, including rackets based on the recent Ebola outbreak.
