They do have a reputation and history. They all seem to band together.
"As reported last week in the Orange County Register, an investor named Daniel Wray has sued Fisker Automotive, alleging that the company and the fund through which he invested, Advanced Equities Inc., committed fraud and breach of fiduciary duty when they sold him the stock.
Wray bought roughly $210,000 in preferred Fisker stock from AEI in the 18 months between October 2009 and April 2011. AEI bundled money to invest, in units of roughly $100,000, from high-net worth individuals. In total, it invested $25 million in Fisker over two years.
Last month, Wray got a letter from Fisker saying that due to the company's "urgent need for equity capital, the financing now contains a 'pay to play' provision" that required him to invest an additional $83,900 within nine days.
Wray risked sacrificing several of the benefits of his preferred stock if he didn't invest. They include protection against "dilution" of his share if further stock was sold, a price discount on future stock purchases if Fisker went public, and a preferential position among creditors in any bankruptcy."