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3 types of securities fraud

Securities fraud is usually the result of false or misleading statements about a company or stock -- or omission of important information about a company or stock. When others make investment decisions as a result of the misrepresented or omitted information, and they suffer financial damages, it could give rise to a securities fraud claim.

Here are three common types of securities fraud:

Securities fraud committed by a company: In this type of allegation, a director or officer of a company is accused of failing to accurately report a firm's actual financial situation. If this artificially increases perception of the company's value, investors might unknowingly make an investment that they would otherwise avoid.

Insider trading: This happens when an individual who has access to confidential information makes a trading decision based on that information. Usually, the insider information will give the investor an unfair and illegal advantage that results in a significant financial profit.

Third party misrepresentation: This happens when a third party finds a relatively inexpensive investment and buys a lot of it. Then, the third party produces misleading or false information to tout the value of the investment, causing investors to purchase the stock and drive up the price. The individual then sells one's investment for a profit.

If you've been accused of one of the above types of securities fraud, you will want to meet with a New York City white collar crimes defense lawyer immediately. Your defense lawyer will formulate and pursue a legal strategy to try and reduce the threat and severity of criminal punishment resulting from your charges.

Source: FindLaw, "Securities Fraud," accessed March 10, 2017

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