Savvy investors are always looking to get in on opportunities early. Unfortunately, that can make them vulnerable to unlicensed brokers promoting Ponzi schemes.
Be careful when an unlicensed broker approaches you about an opportunity. If you decide to invest and end up losing your money in a Ponzi scheme, contact the Ponzi scheme attorneys at Silver Law Group. We have a well-deserved reputation for obtaining excellent results for victims of unlicensed brokers in Ponzi schemes.
According to the Securities and Exchange Act of 1934, anyone who is in the business of making transactions in securities on someone else’s account is a securities broker. Brokers must be registered with the Securities and Exchange Commission (SEC), and failure to register can lead to severe penalties.
There are multiple licenses available to brokers, most administered by the Financial Industry Regulatory Authority (FINRA) and some administered by the North American Securities Administrators Association (NASSA). The licenses a broker requires will depend on the types of securities they hope to sell, whether they want to offer financial advice, and whether they will have a supervisory or managerial role. All securities licenses require passing an exam.
Obtaining the licenses required for registration requires a substantial commitment of time, effort, and money. Some people do not want to make a career of selling securities or offering financial advice, but they do act as agents, promoters, or finders for various businesses or financial instruments. Depending on exactly what tasks they perform, these people may be unlicensed brokers and in violation of the federal securities laws.
Licensed brokers are subject to SEC and FINRA regulation and must adhere to strict guidelines when conducting their business. When investors believe their broker has violated the law or acted unethically, they have recourse through FINRA, and the SEC can suspend or revoke a broker’s license amongst other damages. Investors dealing with unlicensed brokers, on the other hand, have no such protections.
People offering high-risk or novel investments might use promoters or finders to pre-screen potential investors and determine whether they qualify or assess their interest in the opportunity. These finders might:
When finders or promoters receive a commission on the sales they bring in, they could be considered unlicensed brokers under the law.
Ponzi schemes often use finders and promoters acting as unlicensed brokers to drum up interest and lure investors to participate. As the initial investors see healthy returns, they use this past performance information to induce others to invest until the scheme ultimately collapses. Later investors typically lose most or all the money they put into the scheme. Silver Law Group represents investors who have lost money through unlicensed stock brokers in Ponzi schemes and helps them get compensation for their losses.
Unfortunately, by the time a Ponzi scheme collapses, much of the money is usually lost. However, there are several options that might result in investors recouping at least some of their investment.
Silver Law Group attorneys will investigate the scheme and identify potentially liable parties. These may include the promoters of the investment, as well as accountants, law firms, commercial banks, and others like unlicensed stock brokers who aided and abetted the fraudsters. In many cases, a class action lawsuit against these bad actors is a viable option.
Often, getting compensation means working with an SEC receiver or bankruptcy trustee, of which we have extensive experience. You need a skilled advocate to ensure you receive as much as possible from the funds available.
Unlicensed brokers are great salespeople, and it is easy to be taken in. These scammers often focus their efforts on members of a community, like people who belong to the same golf club, church, or other organization.
The securities fraud attorneys at Silver Law Group have spent our careers advocating for investors. We represent people who live all over the U.S. Reach out today to find out how we can help you.
