Sotos Investor Protection Group

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Investment fraud & investment loss claims

Investment fraud can cause more than just financial harm—it can leave you feeling betrayed and overwhelmed. At Sotos Class Actions, our Investor Protection Group helps victims understand their legal rights and take action to recover what they’ve lost.

Investment fraud is a significant and growing problem in Canada. In 2024 alone, Canadians reported losing over $638 million to fraud, with investment scams being the costliest category. If you believe you have been misled or defrauded, it is important to know that you are not alone and you have legal rights.

What is Investment Fraud?

Investment fraud occurs when someone persuades you to make an investment decision based on false, misleading, or deceptive information. These schemes are designed to look like legitimate investment opportunities but are created for the sole purpose of stealing your money.

Fraud can take many forms, from elaborate, multi-layered schemes to false promises made by a single individual. Regardless of the method, the goal is the same: to take your money through deceit.

If you suspect you’ve been misled or defrauded, we’re here to help.

Types of Investment Fraud

Fraudsters are constantly developing new tactics, but many scams fall into recognizable categories. Being able to identify the type of fraud is the first step toward protecting yourself and seeking recovery.

Frauds Targeting Groups

• Ponzi and Pyramid Schemes
  These are among the most well-known types of investment fraud. In a Ponzi scheme, the fraudster uses money from new investors to pay supposed “returns” to earlier investors, creating the illusion of a profitable investment where none exists. Pyramid schemes are similar but focus on rewarding participants for recruiting new members into the scheme. Both are unsustainable and inevitably collapse, leaving the latest investors with significant losses.
• Affinity Fraud
  This particularly deceptive scam targets members of identifiable groups, such as religious or ethnic communities, professional organizations, or social clubs. The fraudster is often a member of the group or builds trust with respected leaders to gain credibility. They exploit the sense of community and shared identity to bypass the natural skepticism of their victims. Early victims unknowingly become involved in selling or advocating for the fraud as it spreads through the group.
• Pump-and-Dump Schemes
  In a pump-and-dump scheme, fraudsters artificially inflate (the “pump”) the price of an asset such as a stock—typically a low-priced “penny stock”—by spreading false and misleading positive news. As unsuspecting investors buy in, driving the price up, the scammers sell off their own holding at the peak (the “dump”), causing the asset’s value to plummet and leaving other investors with worthless investments. These scams often leave everyday investors with worthless shares while fraudsters walk away with profits.
• Investment Seminar Scams
  Some sophisticated fraudsters host polished, professional-looking investment seminars in person, virtually, or a combination of the two. These seminars often promise high or guaranteed returns. Once investors buy into the scheme, the money is often funnelled elsewhere or the investments involve aggressive fee structures that ensure the fraudsters earn a return but ensure a significant loss by the investors.

Frauds Targeting Individuals

• Crypto Investment Fraud
  The complexity and hype surrounding crypto-assets have made them a fertile ground for fraud. These scams involve fake trading platforms that look legitimate, the promotion of non-existent cryptocurrencies, and demands for fake taxes or fees before you can withdraw your supposed profits.
• Romance & “Pig Butchering” Scams
  A cruel and increasingly common scheme that merges a romance scam with investment fraud. The fraudster builds a relationship with the victim over weeks or months through dating apps or social media to gain their trust—a process colloquially known as “fattening the pig”. Once trust is established, the scammer introduces a fraudulent investment opportunity, of late often in cryptocurrency, and guides the victim to a fake trading platform, ultimately stealing their money. These scams exploit trust and emotion to trick victims into fake investments, often using fake trading apps.
• Boiler Room Operations
  This classic scam involves an unsolicited phone call from a salesperson using high-pressure tactics to sell questionable or entirely fictitious investments, such as shares in a private company that is supposedly about to go public.
• Recovery Scams
  In a “double-dip” scam, fraudsters target people who have already been victimized. They pose as a law firm, government agency, or recovery company and claim they can get your lost money back—for an upfront fee. Once the fee is paid, they disappear, and the victim is defrauded a second time. The existence of such scams highlights the importance of verifying that professionals are registered with the applicable regulator for their profession (such as the Law Society of Ontario for lawyers. The Law Society maintains a searchable directory of all licensed lawyers and paralegals in Ontario.)

Fraud comes in nearly endless varieties. Many frauds have elements of one or more of the above schemes or may take another form entirely.

Your Legal Rights and Avenues for Recovery

If you have lost money to investment fraud, you have the right to take legal action to recover your losses. While securities regulators like the Ontario Securities Commission (OSC) can investigate and sanction wrongdoers, their primary role is not recovering lost funds for defrauded investors. Civil litigation is often the most effective path for victims to seek financial compensation. Legal claims may include:

• Fraudulent and Negligent Misrepresentation: Pursuing claims against individuals and companies that made false or misleading statements that induced you to invest.
• Breach of Fiduciary Duty: Holding advisors and firms accountable when they act with a conflict of interest and fail to act in your best interest.
• Breach of Contract: Investment purchases involve contracts. These contracts set out the rights and responsibilities of both you and the person or company selling an investment to you. Breaches of these agreements can entitle you to compensation.
• Statutory Causes of Action: The Securities Act creates causes of action in some circumstances that can simplify recovery.

What to Do If You Suspect You Are a Victim of Investment Fraud

Taking swift action is critical to protecting your rights.

1. Document Everything. Gather and preserve all records related to the investment, including account statements, emails, text messages, promotional or marketing materials, and notes of any conversations.
2. Seek Legal Advice Promptly. The law imposes strict time limits, known as limitation periods, for bringing a legal claim. It is crucial to speak with a lawyer as soon as possible to understand your legal options and ensure your rights are protected. Limitation periods may prevent recovery if you wait too long.
3. Report the Fraud. You should report the matter to your local police and to the Ontario Securities Commission (OSC) Inquiries and Contact Centre at 1-877-785-1555. You can also report it to the Canadian Anti-Fraud Centre. Reporting helps authorities track and stop fraudsters, preventing others from becoming victims.

Contact Us

We understand that speaking out after being defrauded can be difficult. Our experienced team will treat your situation with care and confidentiality. Your preliminary consultation is free, and there is no obligation.