Securities fraud litigation is used when a business or individual commits fraud related to securities investing. This type of fraud can cost investors billions of dollars, especially when it’s linked to a corporation.
Unfortunately, incidents of securities fraud seem to be on the rise, which is why it’s so important to understand your risk as an investor and find an experienced securities fraud legal expert to help you if you are a victim.
What is Securities Fraud?
Securities fraud can come in a variety of forms but is a white collar crime that most often involves the misrepresentation of information to investors in order to affect their decisions. Some acts of fraud are committed in an effort to manipulate the financial markets.
Securities fraud can be committed by a stockbroker, a broker firm, or an investment bank.
Examples of securities fraud might include:
- Breach of fiduciary duty
- Failure to supervise
- Misrepresentation of investment
- Omissions of material facts
- Unauthorized trading
- Ponzi schemes
- Pyramid schemes
- Advanced fee schemes
- Foreign currency fraud
- Broker embezzlement
- Hedge fund-related fraud
- High yield investment fraud
- Manipulating stock prices
- Lying on SEC filing forms
- Committing accounting fraud
- Late day trading
According to the FBI, securities fraud might be linked to high-pressure investment tactics or unsolicited offers and investors should beware if they believe either of these is occurring.
Scholars have counted 148 financial meltdowns since 1870 where a country’s economy has shrunk by ten percent or more. This confirms that booms and busts can be a feature of our economic system, but this recent meltdown went beyond disrupting the way Wall Street made money. Recent investors securities fraud robbed millions of everyday people of their livelihood, their homes, and their retirements.
Check Out Our Securities Fraud Pages:
- Auction Rate Securities
- Auction Rate Securities Collapse Litigation
- Goldman Sachs Securities Litigation
- Insider Trading
- IPO Litigation
- Madoff Securities Investment Fraud
- Sarbanes-Oxley Act
- Securities Fraud Attorneys
- Securities Fraud Lawyers
- Waldman-v-Wachovia Auction Rate Securities Case
- The Birth of Securitization
- Financial Terms Glossary
- Investors Securities Fraud
What Kind of Help Might a Securities Fraud Lawyer Provide?
If you’ve been a victim of an investment fraud scheme, a securities fraud lawyer might be able to help.
When you work with a securities fraud lawyer, he or she might:
- Review and assess financial statements and determine if securities fraud occurred
- Determine the value of the damages that occurred
- Gather testimony from financial experts regarding securities fraud and your case
- File a Statement of Claim with FINRA describing the inappropriate behavior or violation of fiduciary duty and the loss it caused you
- Gather documents relevant to your claim
- Submit evidence to FINRA in support of the allegations of securities fraud
- Represent you at the final FINRA hearing
Financial advisors are required by law to understand their client’s risk tolerance and investment objectives before providing any advice. They must also disclose all information related to an investment and explain all risk associated with that investment.
If your financial advisor failed to do any of these things, you might have a case. A securities fraud lawyer can discuss your situation with you and help you determine your next best step.
Questions to Ask a Securities Fraud Attorney
If you believe you have been a victim of an investment scheme, it’s important to contact a securities fraud attorney. The experience of meeting with an attorney can be intimidating, especially if you aren’t sure a crime was committed or you don’t know how to describe your situation.
An experienced securities fraud attorney can ask you questions about your case and help you determine where you stand and what you should do. During the consultation, it’s important to assess the attorney’s experience and skills, and to determine how comfortable you feel working with the attorney.
Some of the questions you should ask a securities fraud attorney include:
- Is the primary focus of your practice on investment and securities fraud?
- Are you a FINRA attorney?
- How familiar are you with the latest fraud schemes?
- Does your experience include securities fraud cases similar to mine?
- What is your experience with and success rate in FINRA arbitration cases?
- Do you believe I have a strong case?
As a victim of securities fraud, you’re likely feeling a variety of emotions and you are concerned about your financial well-being. A securities fraud attorney might be able to help you sort through the detail of your case and determine whether or not a crime was committed. If you’d like to learn more or discuss a potential case, contact us to schedule a consultation.
Regulatory Changes Afoot
The SEC plans to enhance its disclosure review and investors securities policy operations through the development of three new offices. This broader oversight will focus on large financial institutions, asset-backed securities and other structured products, and securities offering trends.
We Support Victims of Investors Securities Fraud
Investors securities fraud takes on many forms: It involves deceptive practices used to artificially inflate (or depress) the price of a security, entice investors to make decisions to purchase or sell investments, or manipulate the market for a given security. Read Birth of Securitization.
Originally, investors securities fraud protection came from the states in blue sky laws (starting in 1911) enacted to regulate the offering and sale of securities. However, the blue sky laws were often ignored or by-passed without a consistent federal standard. Because more protection was needed, Congress then passed the following acts:
- Congress passed the Securities Act of 1933 to increase public trust in capital markets. Also known as the “Truth in Securities Act” or “Federal Securities Act.”
- A year later, Congress passed the Securities Exchange Act regulating secondary trading of securities; that is, trading between individuals and companies not involving the original security issuers. This Act spawned the Securities and Exchange Commission (SEC) to enforce the federal securities laws and regulate the securities industry.
- The SEC’s authority and oversight were expanded by later acts, including the Trust Indenture Act of 1939, the Investment Act of 1940, the Investment Advisers Act of 1940, the Sarbanes-Oxley Act of 2002, and the Credit Rating Agency Reform Act of 2006.
The SEC includes five commissioners with terms staggered so that one commissioner’s term ends on June 5 each year. While the commissioners are politically appointed by the President of the United States, no more than three may be from the same political party. One of the five commissioners is appointed Chairman. In 1934, President Franklin Delano Roosevelt appointed Joseph P. Kennedy, Sr. as the SEC’s initial Chairman.
Some common forms of investors securities fraud where business fraud attorneys, like Seeger Weiss, are most beneficial are described below:
- Accountant fraud occurs when public accounting firms falsify or recklessly disregard false financial reports on behalf of their corporate clients leading to a false impression of the company’s financial status. The price of the company’s securities is affected by the false financial reports and represents a form of securities fraud.
- Insider trading is the exchange of stocks or other securities by those with non-public information about a company. Originally the definition referred to trading done by company officers, directors, and owners of more than 10 percent of a class of securities. The definition has become more expansive in application and may refer to any individual who knowingly trades securities based on non-public information violating the corporation’s trust to shareholders. The violation of trust to corporate shareholders—someone with non-public information breaches a fiduciary responsibility to company shareholders—is the key issue in affecting whether illegal insider trading has occurred.
- Internet securities fraud, a form of market manipulation, is usually found in “pump-and-dump” schemes. Pump-and-dump schemes involve placing false and/or fraudulent information on the Internet with the purpose of influencing the price of securities. For example, information is disseminated positively influencing the prices of a stock that is then dumped by investors responsible for the false and/or fraudulent information before the price falls to lower levels. The investors’ profit is derived by manipulating the price of stocks with fraudulent information.
- Microcap securities fraud involves stocks with a market capitalization under $250 million that are generally traded on the OTC Bulletin Board and Pink Sheets Electronic Quotation Service. Many microcap stocks trade below $5 a share as penny stocks. Many forms of microcap stock fraud exist, but the more common techniques are pump and dump schemes and selling of “chop stocks.” Chop stocks are purchased for pennies and then sold to unwary investors at dollars a share. “Boiler rooms” pursue microcap stock fraud techniques using telesales to pressure clients into fraudulent trades.
- Disclosure claims are actions by investors against publicly traded corporations where corporate officials have failed to disclose the true state of the company’s financial and business affairs to its investors. In today’s exchange-based securities trading environment, information disseminated to the market by companies and their officials often has a dramatic impact on the price of that company’s stock. Where that information is complete, accurate, and timely revealed, the impact of the disclosure of that information on the price of a security, or the value of a person’s investment, is part and parcel of the investment process. Where information has been only selectively or falsely disclosed such that a misleading picture has been painted, investors may have been wronged.
Investors in securities need to be on the guard against victimization from securities fraud. Accordingly, the securities fraud lawyers at Seeger Weiss LLP might be able to assist victims of securities investors fraud if there are improper and illegal securities practices occurring. If you have been a victim of securities fraud, please contact the securities fraud attorneys at Seeger Weiss LLP.