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How to Report Investment Fraud

When it comes to figuring out how to report investment fraud, getting yourself out of a scam involves much more than just working to file a complaint.

By Nathaniel Channing IIIPublished 6 years ago 5 min read

One of the most notorious investment fraud scandals involves Bernie Madoff, his 4,800 clients, and $64.8 billion. We all know that investing is the smart thing to do with money that’s just sitting around. Whether you're investing your inheritance or your savings to have a better chance of keeping up with inflation, you might be able to make money without putting in extra long hours at the cubicle. However, like any financial pursuit there is the risk that you could get caught up in financial fraud. It's important to determine how to cope if you’ve been tricked into a pyramid scheme or if you've signed your money away to a fraudulent investment agency. When it comes to figuring out how to report investment fraud, getting yourself out of a scam involves much more than just working to file a complaint.

Collect your information.

In a secure location, collect all of the information relating to the fraud. This includes the perpetrator's name, contact information, email addresses, website, and whatever regulatory number they were registered under. Also in this folder should be any reports you've filed, and any recent credit reports that you have, preferably one from each major credit reporting company. If you have any phone call history with the perpetrator, include those call logs, as well as the names and positions of everyone you spoke with. The more information that you can provide to the authorities, the more likely that they’ll be able to prosecute the people responsible for your situation.

Understand your rights.

It’s likely that this has never happened to you before, which means that you should do a little research on what your rights are as a fraud victim. The federal government sets laws in place to prepare for situations like this. Check out the US Department of Justice’s website for your federal rights, and connect with your state attorney general in case your state has protections in place, too. There’s an “Investor Bill of Rights” available from the North American Securities Administrators Association (worth a Google) and the Financial Industry Regulatory Authority has a list of “Prohibited Conduct” you can reference to pinpoint exactly where the perpetrator broke the law.

Loop in the regulators.

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After you’ve got your ducks in a row and your story straight, it’s time to partner with the people who can help you fight back. There are entities at every level of government who are in charge of regulating the investment industry. Below is a list of agencies you should file a complaint with:

  • Financial Industry Regulatory Authority
  • U.S. Securities and Exchange Commission (SEC)
  • North American Securities Administrators Association
  • National Association of Insurance Commissioners
  • National Futures Association
  • U.S. Commodity Futures Trading Commission
  • Internet Crime Complaint Center

Notify law enforcement.

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The next step in reporting the fraud is to notify law enforcement so that they can investigate the people responsible. Looping in the police could also help prevent anyone else from falling victim to the responsible party. Below is a list of agencies that you should contact:

  • Local Law Enforcement – to file a police report
  • District Attorney and Attorney General
  • Federal Law Enforcement – your local FBI team. You can also submit an online tip.

File a report with the Federal Trade Commission.

The Federal Trade Commission (FTC) has a website called the FTC Complaint Assistant that walks you through the different kinds of fraud and helps you figure out how to file your unique case. Then, you'll fill out a step-by-step questionnaire to catalogue the details of what’s happened. While they don’t resolve your case, they do provide information on what do to next. There’s also chat specialists available on the website if you need more assistance.

Recover your assets.

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After you report investment fraud, you'll probably wonder "what about my money?" While there isn’t a direct route to getting your cash back, you do have options. Arbitration, mediation, and civil lawsuits are potential routes to take. Civil attorneys can help to analyze your specific case and provide advice on civil remedies that are available. Some law schools also offer services that you can take advantages of. Also check out the National Crime Victim Bar Association and the Public Investors Arbitration Bar Association for attorneys who might sit with you for a consultation without any commitment or obligation.

Be patient.

Unfortunately, when it comes to financial fraud, attaining justice can be a slow process. If you take the route of filing a civil lawsuit, just be aware that these take time. Keep a close record of which agencies you file reports with, and in 30 days be sure to follow up with them if you haven’t heard anything back. These institutions deal with thousands of reports, and yours is one of many instances of investment fraud.

Protect yourself for the future.

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You’ve probably had a headache since first realizing that the investment fraud occurred, so it’s very important to take steps to ensure that this won’t happen to you again. Hiring a financial advisor and an accountant provides a layer of protection and is one of the best ways to reduce your chances of being victimized by investment fraud. These counselors can help you determine whether or not to trust your money with an outside source. Let’s face it, having a second (or third!) opinion is always a good thing.

Spot the red flags.

In the investment world, if something seems too good to be true, it probably is. Over an extended period of time (10-15 years), investors should expect a maximum of 7 percent return on investments. People who make promises or demands are some of the tell-tale signs of investment fraud. If someone is promising you more than that, there’s reason to be suspicious. There’s also no such thing as a guaranteed return. If anyone promises you money, don’t trust them. The nature of the stock market will always be uncertain, and anyone who tries to convince you otherwise should not be trusted. Also look out for people who demand money on-the-spot or investment agencies that try the marketing ploy, “everyone is doing it.” That reasoning didn’t work on your mom when you were a kid, and it shouldn't work for you now.

Move forward confidently.

If you’ve had to report investment fraud, that can indeed be very discouraging. However, if you took the appropriate steps to report and, hopefully, resolve the situation, there’s no reason to continue living in fear. Take this experience as a lesson learned and move forward confidently to your financial future. No risk yields no reward, and getting hurt once definitely shouldn’t stop you from getting back up on your feet and fighting on!


About the Creator

Nathaniel Channing III

The movie buff that can tell you about the latest releases, especially in the sci-fi and comic/superhero world.

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