Third party asset recovery companies solicit victims of scams, including investment frauds, with promises to file complaints with regulatory agencies and to help recover victims’ money for a fee. The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to urge investors and fraud victims to think carefully before paying money for asset recovery services that may be fruitless.

The SEC regularly receives questions and complaints from investors who have been contacted by asset recovery companies with promises to recover money lost to financial scams or investment frauds.  The companies often charge a substantial fee – from hundreds to thousands of dollars – to provide these services.  These companies typically find potential customers by pulling names and contact information of victims from court filings and other lists of investors.      

Investors who’ve already been victimized by fraudsters should exercise caution before using these services – especially if the asset recovery company is merely taking steps the investor could take himself.  Although these companies sometimes claim to have elaborate asset recovery expertise, or even legal expertise, some of them do little more than draft a demand letter to the original scam artist and send a boilerplate complaint to the logical regulatory agency.  Those are two steps that victims can take easily on their own, free of charge.  

Further, demand letters may be useless, especially if the original scam artist or the company involved is insolvent, bankrupt or subject to a court judgment, or if the statute of limitations (the time period to file a claim) has expired.  Most regulatory agencies have free and simple mechanisms to file complaints on their websites, including the SEC, CFTC, FTC, CFPB, FINRA, and state securities regulators and attorneys general.  

If you are considering paying an asset recovery company to seek funds lost to a scam, make sure you ask what measures the company will take on your behalf, and for what cost, and then consider if those are actions you can take yourself and, if so, are worth the money.  You can also call the SEC’s Office of Investor Education and Advocacy at (800) 732-0330 or ask a question online.

Additional Resources

• Investor Bulletin:  How Harmed Investors May Recover Money
• Investor Alert: Beware of Government Impersonators Targeting Fraud Victims
• NASAA Informed Investor Advisory: Third-Party Asset Recovery Companies
• NASAA: Are you an informed investor?  Third Party Asset Recovery Companies: Are They Advocating For You?