Fighting for the Rights of the Accused in Federal Court Since 2004
Fighting for the Rights of the Accused in Federal Court Since 2004
Securities fraud is the act of lying or sharing insider information about a company or its stock value to influence other people’s investment decisions. While this may seem straightforward, the actual practice of prosecuting or defending a person who is charged with securities fraud is complex. Securities fraud charges cover a wide range of acts that a person can commit and often coincide with an SEC civil action or investigation.
Below are a few common examples of securities fraud:
Ponzi Schemes
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise high returns with little or no risk. Instead, they use money from new investors to pay earlier investors and may steal some of the money for themselves. With little or no legitimate earnings, Ponzi schemes require a constant flow of new money to survive. When it becomes hard to recruit new investors, or when large numbers of existing investors cash out, these schemes tend to collapse.
Market Manipulation
Market manipulation occurs when an officer or director of a corporation does not accurately report the business’s financial information to its shareholders. This inaccurate report can artificially raise the value of the company’s stock and may urge investors to buy shares of an ailing company. If the company then goes bankrupt, the people who bought shares based on false information lose their entire investment.
“Pump And Dump” Schemes
“Pump and dump” schemes are a prevalent type of third-party misrepresentation that occur when a third-party gives out false information about the stock market, a company or an industry. In a “pump and dump” scheme, a person will find an unknown company with affordable stock and buy many shares. That person will then send out false information about the company to encourage others to buy the stock, which then drives up the price. Once the price of the stock is high enough, the person sells, or dumps, their shares for a profit, devaluing the stock.
Insider Trading
Insider trading is a type of securities fraud that involves the trading of a corporation’s securities (stocks, bonds or stock options) by corporate insiders such as officers, key employees, directors or holders of more than 10 percent of the firm’s shares. Insider trading is illegal when an insider buys or sells a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.
Examples of insider trading include:
The criminal penalties for all forms of securities fraud are severe. Call us at 561-932-1690 to schedule your free consultation.
SEC Rule 10b-5 broadly forbids three things:
Brokers may be held liable for violating Rule 10b-5 if an investor proves that:
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
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