SEC Issues Investor Bulletin on Recouping Losses from Fraudulent Investment Schemes

The SEC Office of Investor Education and Advocacy issued an Investor Bulletin to provide information to investors who were harmed by securities fraud or other securities law violations.

The SEC explained that, when an investor is harmed by a violation of federal securities laws, a number of different processes exist to help investors recover money that was lost through fraudulent investment schemes. In the Investor Bulletin, the SEC explained that, in some cases, a court or the SEC may order the individual or firm to disgorge the ill-gotten gains or pay a monetary penalty, which then may be distributed to investors.

The SEC recommended that investors consult its "Information for Harmed Investors" Web page for a list of SEC lawsuits in which a distribution of money to harmed investors may occur, as well as the SEC's Web page, "Distributions in Commission Administrative Proceedings: Notices and Orders Pertaining to Disgorgement and Fair Funds," for a list of SEC administrative proceedings in which the SEC required a distribution of money to harmed investors.

The Investor Bulletin also stated that, in certain circumstances, a private party, in addition to and separate from the enforcement action filed by the SEC, may file a lawsuit seeking class-action status and relief on behalf of harmed investors. If a case is filed, then an investor might be eligible to participate in any recovery through the lawsuit. The SEC recommended that investors visit the Securities Class Action Clearinghouse Web page to find out more information on private class-action lawsuits.

See: Investor Bulletin: How Harmed Investors May Recover Money.