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Investors finance lawsuits for potentially big returns

Justice in America is expensive. But for investors, it can be lucrative. There’s a growing trend of individuals and firms who help bankroll litigation in the hope of getting a bigger payout from settlements and monetary damages. It’s a business most people don’t know about and is largely unregulated.

Law firms turn to litigation financing to help cover the costs of big, complex lawsuits. According to estimates, it’s anywhere from a $5 billion to $10 billion industry in the United States.

Chris Gillock, managing director at Colonnade Advisors, a Chicago investment bank that has tracked the rise of the industry, wouldn’t say if his firm invests, but he understands the appeal: People and companies are always going to sue each other.

“That’s the theory. Certainly it’s played out so far in our history,” he said.

And that certainty is attractive to investors, who often fund individual cases that promise a big return, like a class-action or product liability case. They can also buy equity in companies that do the financing. Gillock said investors can see returns as high as 20 percent. He said litigation financing is part of a growing nook of investment products that aren’t tied to the ups and downs of the economy.

State regulators unveil nationwide crackdown on suspicious cryptocurrency investment schemes

Securities regulators across the United States and Canada announced dozens of investigations Monday into potentially deceitful cryptocurrency investment products, the largest coordinated crackdown to date by state and provincial officials on bitcoin scams.

As many as 70 investigations have been opened in the sweep, with more expected in the coming weeks, said the North American Securities Administrators Association, which helped coordinate the probes. As many as 35 cases are pending or already completed, with some resulting in cease-and-desist letters warning the alleged schemes that their unregistered activity violates state securities law.

The enforcement actions, which have not been previously reported, take aim at efforts by groups in more than 40 jurisdictions to attract money from unsuspecting investors. They target unregistered securities offerings that promise lucrative returns without adequately informing investors of the risks, according to state regulators. The state agencies are also pursuing suspicious cases of initial coin offerings, or ICOs, a fundraising technique used by both legitimate and illegitimate cryptocurrency projects in ways that resemble initial public offerings of stock.