by Brian Mahany
For most consumer purchases, getting a refund for a defective product or service that doesn’t meet our expectation is a relatively easy process. Purchase a hedge fun or private placement and its impossible. You may be able to sell the investment but thats much different than obtaining a refund. In most instances, people don’t complain when the value of their investment is rising. People usually want to sell when they realize the value has dropped.
Many hedge funds and private portfolio investments are sold to the public. Often they are sold by broker dealers. If all the people receiving are properly licensed, getting a refund may not be so easy. A few sellers are exempt from registration but most are not. That means the people selling these investments must be registered.
Many are not.
Anecdotal information reveals that many hedge funds sell investments through unlicensed sales people or share commissions with those lacking proper SEC licenses.
So what happens if the person selling you the investment wasn’t licensed? If you make money, great. You can keep your profits and smile on the way to the bank. If you lose, however, you can sue in state court for rescission and get back your original investment plus interest. State law varies so what works in one state may not work in another.
There is some fine print so first, don’t rely on a 400 word blog post for legal advice. Next, the statute of limitations for rescission claims varies from state to state. That means don’t wait very long. Once you decide the investment isn’t a good idea consult with a lawyer immediately. Remember too, there are exceptions to the registration requirements. Finally, you can only “rescind” the original transaction if you still hold the investment. Once you sell, rescission isn’t an option in most jurisdictions.
Rescission is a little known remedy. We have used it successfully, however, to get back hundreds of thousands of dollars for our clients.
The stockbroker fraud lawyers can help with a wide variety of investment fraud matters including rescission of existing investments and arbitration of fraud claims before the Financial Industry Regulatory Authority (FINRA). If you lost money because of the actions of a stockbroker, investment adviser, promoter, hedge fund operator or other financial professional, give us a call. Many cases – including rescission cases – can be handled on a contingent fee basis meaning no legal fees unless we recover money for you.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Services available in many jurisdictions.
Want more information? Our Due Diligence blog has a search engine located in the upper right hand corner. For more information on specific topics, just click the fraud recovery tab or type in the name of a particular topic such as “stockbroker fraud” in the search bar. We have posted hundreds of informative articles on our site.