Naming the kind of fraud
Stock fraud covers several different problems, and the right path depends on which one you have. Misconduct by your own broker or adviser, such as unauthorized or excessive trading or recommendations that did not fit your situation, is usually pursued against the firm. Lies by a public company about its business tend to lead to securities class actions on behalf of many shareholders. Pump-and-dump schemes promoted through social media and messaging apps may involve people who are hard to find, which shifts the focus toward regulators and any accounts where money can still be frozen. A market loss, even a painful one, is not fraud by itself.
Records investors should pull together
Collect account statements, trade confirmations, the account application and any investment profile you signed, and emails or messages with the broker or promoter. Screenshots of social media posts, chat groups, and promotional emails are valuable because they are often deleted once a stock collapses. Note when you first suspected a problem, since these claims have time limits that can run sooner than people expect. You can check a broker's registration and disciplinary history on FINRA BrokerCheck, and you can send a tip to the SEC or a complaint to FINRA at any stage.
Arbitration, class actions, and regulators
Most brokerage customer agreements require disputes to go to FINRA arbitration rather than court, a forum with its own procedures that often moves faster than litigation. In a securities class action, investors usually do not need to do anything until there is a settlement, although some choose to seek a lead role or to opt out and sue separately. Regulators, including the SEC and the New York Attorney General, can pursue fraud on their own, and some enforcement actions create funds to compensate harmed investors, but they are not a substitute for your own claim. We start by looking at who handled your money, what was said, and which forum is open to you.
