What Is Securities Fraud?
Securities Fraud is an umbrella term that includes a wide range of illegal activities that involve deceiving investors or manipulating financial markets. It is a serious offense that can carry both criminal and civil punishments. Perpetrators of securities fraud can include private investors, investment banks, corporations, brokerage firms, analysts, and stockbrokers
The securities fraud attorneys at Colling Gilbert Wright & Carter have substantial experience helping victims of fraud recover their losses. We are committed to holding wrong-dors accountable for their negligence and helping our clients obtain the justice they deserve.
Common Types of Security Fraud
Securities fraud can occur in a number of ways. Some of the most common types of securities fraud that the SEC regulates against include:
- Misrepresentation: This occurs when untrue or misleading information about a company or its securities is presented to the public or to an investor.
- Accounting fraud: This involves a party parties that keep inaccurate books or purposefully present false information
- Insider trading: This type of securities fraud involves trading based on information that is unavailable to the public.
- Ponzi and pyramid schemes: These fraudulent activities involve the use of funds collected from fraud victims to pay the high rates of return promised to previous investors. Although the payouts give the impression of a legitimate enterprise, the truth is that investors are the only source of funding.
- High yield investment frauds: Typically in the form of unsolicited offers, this type of fraud is characterized by “too good to be true” investment opportunities that promise high rates of return with little to no risk. This can involve numerous types of investments, such as precious metals, real estate, commodities, securities, and more.
- Advanced fee schemes: This type of fraud occurs when victims are convinced to advance a relatively small sum of money to cover “processing fess” and “taxes” in the hope of reaping substantial gains. Because there is no legitimate underlying investment, gains never materialize.
Who Can Commit Securities Fraud?
Both businesses and individuals can commit securities fraud. Potential parties can include:
- Private investors: This can include those acting on inside information.
- Corporations: This may involve business entities that hide or distort information.
- Analysts or financial advisors: Securities fraud can occur when analysts intentionally offer inside information or poor advice.
- Brokers and dealers: When these people mislead clients or advice based on inside information, they can and should be held accountable.
When Can You Sue for Securities Fraud?
In the world of investments, some losses are expected. However, there are investment firms and brokers who purposely cheat or mislead their clients. Often referred to as “white collar” crimes, this type of fraud can significantly affect the lives of its victims. Many brokerage firms have clients sign agreements when they are taken on as clients, which may legally bind them to an arbitration clause.
There are certain circumstances in which you may sue for securities fraud, such as cases in which your stockbroker or firm:
- Engaged in excessive trading practices (churning) to increase his or her commissions
- Made one or more trades without your authorization for his or her self-interests
- Failed to diversify your investments and over-concentrated your portfolio
- Made recommendations that were not appropriate for your investment needs and interests
- Omitted critical information to convince you to make a trade or financial decision for their own self-interest
- Made false statements to persuade you to make a trade
Brokers and investment firms must act in your best interests and pursue your investment goals in good faith. Financial losses don’t necessarily indicate that your investment firm or broker violated their fiduciary duty. After all, the stock market involves inherent risks. Unfortunately, some investment companies and stockbrokers put their commissions and self-interests above yours. When this occurs, you may have grounds to sue for securities fraud. Stockbroker fraud can cause extraordinary financial losses, jeopardizing your finances, retirement, future, and wellbeing.
Securities fraud is woefully under-reported due to the reluctance of victims to admit they were tricked by a broker or investment firm. Victims of securities fraud victims often blame the normal ebbs and flows of the stock market rather than the wrongdoer who failed to act in their best interests. This is a mistake.
You are entitled to honest advice from your stockbroker or brokerage firm. Misrepresentation and fraudulent investment practices can cause significant financial losses. When this occurs, it is in your best interests to seek counsel from an experienced attorney as soon as possible to reclaim your lost investment.
Call Our Securities Fraud Attorneys Today
Your stockbroker or investment firm has an obligation to act in your best interests, not their own. If you may have been the victim of securities fraud, contact Colling Gilbert Wright & Carter today online or at (800) 766-1000 for a free consultation. We can help you pursue justice and recoup your losses.