Federal Enforcement, Arbitration and Litigation: What Defrauded Investors Need to Know

While federal securities laws protect investors, understanding your legal rights—and what you need to do to protect them—can be challenging. If the U.S. Securities and Exchange Commission (SEC) is pursuing enforcement action, can you rely on the SEC to recover your fraudulent investment losses? Or, do you need to hire a securities fraud lawyer to pursue arbitration or litigation?

Understanding the Differences Between Federal Securities Fraud Enforcement, Arbitration and Litigation

As an individual investor, it is up to you to protect your legal rights. So, even if the SEC is pursuing enforcement action against your brokerage firm or investment advisor, you still need to take action. Here is a quick introduction to the differences between federal securities fraud enforcement, securities fraud arbitration and securities fraud litigation:

1. Federal Securities Fraud Enforcement

The SEC enforces brokers, advisors and firms’ obligations under the federal securities laws. It has the power to impose civil and administrative penalties directly, and when criminal charges are warranted, it can work with the U.S. Department of Justice (DOJ) to pursue prosecution. However, the SEC also has the authority to settle its enforcement cases, and these settlements can lead to drastically reduced liability for targeted individuals and entities.

This is one reason, among others, why individual investors should not rely on the SEC to recover their fraudulent investment losses. There is no guarantee that an SEC enforcement action will be successful; and, even if an enforcement action is successful, there is no guarantee that it will result in investors recouping their losses.

2. Securities Fraud Arbitration (FINRA Arbitration)

For many defrauded investors, seeking to recover their fraudulent losses involves filing for securities fraud arbitration. The Financial Industry Regulatory Authority (FINRA) works alongside the SEC to regulate the securities industry, and it provides an arbitration forum for investors to pursue claims against their brokers, advisors and firms. Participation in FINRA arbitration is mandatory for registered individuals and entities, and arbitration can offer a variety of benefits over pursuing an investor’s claims in court.

3. Securities Fraud Litigation

However, FINRA arbitration isn’t necessarily the best option—or even an option at all—in all cases. Sometimes, investors will need to go to court to assert their legal rights. An experienced securities fraud lawyer will be able to help you take appropriate legal action based on the circumstances of your case, and whether you need to pursue FINRA arbitration or securities litigation, you can rely on your lawyer to seek full recovery of your fraudulent investment losses as efficiently as possible.

Do You Need to Take Legal Action? Talk to a Securities Fraud Lawyer for Free

Do you need to take legal action to recover your fraudulent investment losses? If so, we can help, but it is important that you contact us promptly. To discuss your case with an experienced securities fraud lawyer in confidence as soon as possible, call 212-742-1414 or tell us how we can reach you online today.