securities law

In this scheme, the victim pays pays money to someone in anticipation of receiving something of greater value, but then receives little or nothing of value in return. The variety of advance fee schemes is limited by the imagination of the scam artists who offer them. Advance fee scams can involve the sale of products or services, the offering of investments, lottery winnings, gifts, or any other windfalls.

A pyramid scheme is a non-sustainable business model where investment returns are typically from membership or sign-up fees associated with newly recruited members and are not related to returns from any underlying investment. Pyramid schemes can be divided by whether the scheme involves the sale of a product.

Named after Charles Ponzi, who infamously bilked investors out of millions of dollars in the 1920s, the Ponzi Scheme is an investment scam that involves the payment of abnormally high "returns" to investors that are actually paid from money paid in by other investors. While it's possible that a Ponzi Scheme may involve some real investment, the distinction between a legitimate investment and a Ponzi Scheme is that some of the returns are not from legitimate investments but are merely a transfer of money from new investors to earlier investors.

EIAs are financial products from insurance agencies that offer a minimum guaranteed interest rate combined with an interest rate linked to a market index such as the S&P 500. The investment is divided into two parts. During the accumulation period, the investor makes a lump sum or a series of payments. After the accumulation period, the insurer will make periodic payments back to the investor or can pay back a single lump sum amount.

Affinity fraud is not a particular type of fraud but refers to all frauds targeted towards members of an identifiable group of individuals such as those with a common religion, ethnic heritage, background, or interests. The perpetrators of affinity fraud may pretend or may actually be members of the targeted group and exploits the groups' inherent common trust to recruit victims for a scam. Pyramid and Ponzi schemes are two examples of scams which criminals might use to take advantage of people recruited based on some common background or interest.

In this investment scheme, brokers may advise clients that they can retire early by cashing out their retirement accounts and adopt an aggressive growth investment strategy. The danger of this type of aggressive investment is that it exposes retirement-aged individuals to a great deal of risk because of the possibility of substantial fluctuation in the value of their portfolios. Promises of high returns, making as much money during retirement as when working, or a never-ending stream of investment returns are all red flags.

Enforcing the Award

Originally prepared by Lucia Benabentos of the Cornell Law School Securities Law Clinic.

Parties may voluntarily comply with an award. However, in the event of noncompliance, the arbitral panel has no power to enforce the award, only a court has the power to force compliance. Thus, a party seeking to enforce an award may have to sue in court.

Arbitrators Deliberate and Grant an Award, Fees are assessed

Originally prepared by Lucia Benabentos of the Cornell Law School Securities Law Clinic.

Hearings

Originally prepared by Lucia Benabentos of the Cornell Law School Securities Law Clinic.

Finding an expert

Originally prepared by Lucia Benabentos of the Cornell Law School Securities Law Clinic.

Experts can provide necessary information that supports claims made by either the claimant or the respondent. The decision to hire an expert depends on a number of factors: