The North American Securities Administrators Association (NASAA) was warned victims of investment fraud to “use caution” if they are approached by companies promising to help them recover their money, or to help bring the perpetrator of the scam to justice, in exchange for a fee.
Many of these so-called “asset recovery companies” are not law firms, says a NASAA advisory published on Thursday, despite the fact that they may advertise that they can provide legal assistance. Instead, these firms charge fees to victims of investment fraud in exchange for filing boilerplate complaints with regulators, the NASAA advisory says.
“Often, the information contained in these complaints relates to companies that are no longer in business, have filed for bankruptcy, or have already been subjected to previous regulatory action. Sometimes the complaints are based upon information that is too old for legal action,” the NASAA advisory says. “In the end, the investor risks becoming victimized for a second time.”
“These companies give investors false hope that they will recover lost funds. In reality, the investment scheme is often so old that the company is either defunct or bankrupt, and recovery is very unlikely,” says Judith Shaw, president of NASAA and Maine Securities Administrator, in a statement. “It pays to remember the old adage: ‘once bitten, twice shy’.”