Protect Your Investment With an Investment Fraud Attorney

Investing should be a path to financial growth and security, but fraudulent schemes and unethical broker practices can derail even the most well-planned financial strategies. When investors are misled, deceived or exploited, the consequences can be devastating, leading to significant financial losses and emotional distress. Investment fraud can strip victims of their savings, retirement funds and peace of mind.

Sonn Law Group specializes in representing investors who have suffered losses due to fraud, broker misconduct and securities violations. With over 30 years of experience holding financial institutions and advisors accountable, our firm has secured hundreds of millions in recoveries for defrauded investors nationwide. 

This guide will walk you through the most common forms of investment fraud, the legal process for recovering losses and how Sonn Law Group can help you fight for justice.

What Is Investment Fraud?

Investment fraud refers to deceptive practices meant to mislead investors and manipulate financial transactions for unlawful gain. At its core, it involves intentionally providing false or misleading information, withholding critical details or offering fraudulent investment opportunities to exploit individuals seeking financial growth. Fraudsters often entice victims by promising high returns with little to no risk — claims almost always too good to be true.

Investment fraud doesn’t just result in financial losses — it can upend an investor’s entire financial future. Many victims lose their life savings, retirement funds or emergency reserves, making it difficult to recover. Beyond the monetary toll, the emotional consequences can be severe. Victims often experience anxiety, stress and a deep sense of betrayal, making it difficult to trust financial institutions or advisors again. Some struggle with guilt or shame, believing they should have spotted the deception earlier.

Understanding the different types of fraud and their impact is the first step in protecting your financial future. If you suspect you’ve been a victim of investment fraud, legal action may be necessary to recover your losses and hold the responsible parties accountable.

Common Types of Investment Fraud Cases We Handle

Fraudulent investment schemes come in many forms, all with the same goal — exploiting investors for financial gain. These schemes can lead to devastating financial losses, whether through deception, excessive trading or outright theft. Below are some of the most common types of investment fraud.

Ponzi Schemes

Ponzi schemes promise high returns with little or no risk, but instead of generating legitimate profits, they use money from new investors to pay earlier participants. These schemes rely on a continuous influx of new investors to sustain payouts, making them inherently unsustainable. When recruitment slows, or too many investors attempt to cash out, the scheme collapses, leaving victims with massive financial losses. 

Excessive Trading and Churning

Some brokers exploit their clients’ accounts by making unnecessary trades solely to generate commissions — a practice known as churning. Excessive trading not only racks up fees but also increases an investor’s exposure to market risks, often leading to devastating financial losses. Since each transaction must generate even higher returns to cover commissions, margin interest and fees, victims of churning often struggle to break even.

Unauthorized Trading

Brokers are required to obtain explicit authorization before making trades in a client’s account. Unauthorized trading occurs when a broker executes transactions without the investor’s consent, attempts to justify trades after the fact or manipulates account records to conceal unauthorized activity. This practice directly violates Securities and Exchange Commission (SEC) regulations and often results in unexpected financial losses for investors.

Breach of Fiduciary Duty

Brokers and financial advisors have a fiduciary duty to act in their client’s best interests, which includes providing sound investment advice, full disclosure of risks and avoiding conflicts of interest. A breach of fiduciary duty occurs when a broker prioritizes personal financial gain over the client’s well-being, engages in unauthorized trading or recommends unsuitable investments. Courts have consistently upheld the legal obligation of brokers to manage accounts with care, diligence and transparency.

Misrepresentation or Fraudulent Advice

Investment fraud often occurs when financial professionals mislead investors by providing false information, omitting critical details or failing to disclose risks associated with an investment. Misrepresentation can happen in many ways, including:

• Providing incomplete or inaccurate investment information
• Downplaying risks or exaggerating potential returns
• Failing to conduct proper due diligence on security offerings

When investors rely on misleading information to make financial decisions, they may suffer severe financial losses that could have been avoided with full transparency.

Pump and Dump Scams

Pump and dump schemes involve fraudsters artificially inflating a stock’s price by spreading false or misleading information, often targeting low-cost penny stocks. Once the price surges, they sell off their shares at a profit, causing the stock’s value to collapse and leaving unsuspecting investors with heavy losses. These schemes often rely on social media, online forums or fake press releases to manipulate demand.

Cryptocurrency Scams

Cryptocurrency scams exploit the hype around digital assets, luring investors into fraudulent initial coin offerings (ICOs), fake exchanges and Ponzi-like crypto schemes. Scammers may manipulate coin prices through pump-and-dump tactics or disappear with investor funds, leaving victims with worthless tokens. With limited regulatory oversight, crypto fraud remains a significant risk for investors.

The Legal Process for Recovering Investment Losses

Recovering investment losses caused by fraud or broker misconduct requires a structured legal approach. Investors who have been defrauded or misled must navigate a complex process to hold brokers, financial advisors or firms accountable and reclaim their losses. 

Understanding the key steps involved can help investors take informed action toward financial recovery.

1. Initial Consultation and Case Evaluation

The first step is a comprehensive consultation where an experienced securities attorney reviews your case, assesses the evidence and determines the viability of your claim. Clients receive an honest evaluation of their legal options, potential outcomes and the best strategy for pursuing recovery.

2. Gathering Evidence and Financial Analysis

Building a strong case requires thorough documentation. Attorneys collect key financial records, trading data and communications between the investor and their broker. A detailed financial analysis helps identify any fraudulent activities, excessive trading patterns or regulatory violations that contributed to the losses.

3. Filing Claims With FINRA or the SEC

Most investment fraud cases are handled through arbitration by the Financial Industry Regulatory Authority (FINRA), which provides a faster alternative to traditional litigation. Attorneys draft and file a statement of claim formally outlining the allegations against the broker or brokerage firm. The firm then has 45 days to respond, after which arbitration proceedings move forward. In some cases, claims may also be filed with the SEC or pursued through civil litigation.

4. Preparing for Arbitration or Litigation

Once a claim is filed, preparation for arbitration or trial begins. This includes:

• Document discovery: Exchanging key financial records with the opposing party
• Arbitrator selection: Choosing a panel from FINRA’s list of neutrals
• Legal strategy development: Strengthening arguments with expert testimony and regulatory precedent
• Negotiation attempts: Seeking a settlement before proceeding to a hearing

FINRA arbitration typically resolves cases faster than court proceedings, often within 16 months. However, in complex cases involving third parties or broader fraudulent schemes, litigation may be necessary.

5. Ongoing Support and Advocacy

Navigating investment fraud recovery can be stressful, but clients are not alone in the process. A dedicated legal team provides:

• Regular case updates and clear communication
• Expert legal guidance to simplify complex financial matters
• Aggressive representation during arbitration hearings or courtroom trials
• Skilled negotiation tactics to maximize financial recovery

While no attorney can guarantee a win, working with a firm experienced in securities litigation significantly improves the likelihood of recovering lost investments.

How Sonn Law Group Helps Victims of Investment Fraud

Investment fraud can be devastating, but victims have legal options to recover their losses. Sonn Law Group has a long track record of successfully representing defrauded investors holding brokers, financial advisors and investment firms accountable for misconduct. With decades of experience in securities law, the firm has helped clients recover millions in cases involving Ponzi schemes, excessive trading, misrepresentation and unauthorized transactions.

Sonn Law Group specializes in complex cases involving FINRA arbitration, SEC regulations and brokerage firm liability, ensuring investors receive aggressive legal representation. We’ve secured over $54 million in recoveries for Ponzi scheme victims, including major settlements against some of the largest financial institutions. Clients benefit from our contingency fee structure, meaning no recovery, no fee — ensuring access to justice without financial risk.

Why Choose Sonn Law Group?

Sonn Law Group is nationally recognized for our dedication to investor protection and ability to take on even the most powerful brokerage firms. With over 30 years of experience in securities fraud cases, we’ve helped clients recover significant losses through both arbitration and litigation.

Proven Results:

• $70 million recovery in the Medical Capital Ponzi scheme.
• $50 million judgment against Ponzi scheme operators.
• $16 million verdict against the FDIC.
• $11.1 million verdict against Smith Barney for broker misconduct.

Our nationwide representation ensures that investors across the U.S. receive experienced legal counsel tailored to their specific cases. Led by Jeffrey Sonn, a Top 500 Financial Plaintiff Lawyer, our attorneys are committed to delivering results. 

Contact Our Investment Fraud Attorneys Today

Investment fraud can have lasting financial and emotional consequences, but taking legal action can help you recover your losses and hold the responsible parties accountable. With the right legal team, you can navigate the complexities of securities litigation and work toward securing the compensation you deserve.

If you’ve suffered financial losses due to investment fraud, contact us today for a free consultation.