What should an investor do if they are a victim of a ponzi scheme?
First and foremost, do not write a complaint letter to the brokerage firm or bank whose agent ran the ponzi scheme.
Often, when this activity is finally discovered by the brokerage firm, the firm will attempt to do an “investigation”
to determine what transpired. A Ponzi scheme victim should never do this. Unfortunately,
this investigation is almost always an attempt by the brokerage firm to limit its own financial liability. The
firm will ask clients to simply put their complaint in writing with as much detail as possible. The brokerage
firm will lead the client to believe they will reimburse the client for losses in a very short period of time.
In almost all instances, the brokerage firm will “reject” the investor's claim and provide an excuse for
why it was rejected. Now the brokerage firm has the client locked into a story and the firm will utilize
this information throughout the arbitration lawsuit to their advantage. Innocent disclosures made by the client
will be used throughout the case by the brokerage firm to the firms advantage. Very good cases have fallen apart
because of representations or disclosures the client made in these letters or other correspondence to the brokerage firm or
regulators. It is imperative for clients to not cooperate with the brokerage firm and not put anything
in writing. Retaining legal counsel immediately is crucial to protect the client’s rights and
ensure a full recovery.
