Securities fraud is a serious matter, and anyone charged with this crime could face prison time. New York professionals involved with the securities industries should be aware of the common types of such fraud. Doing so may help them avoid legal troubles by accidentally making mistakes that could be construed as fraud.
Forms of securities fraud
Securities fraud comes in many forms, and investors may get caught off-guard by them. Pump-and-dump schemes are not uncommon, as someone may purchase shares of a penny stock or another asset at a low price and take steps to pump it up and then sell it before the stock eventually crashes. Sometimes, the pumping involves releasing false or misleading information.
A business could lie to investors by presenting fraudulent accounting documents. Others may claim to invest the money when they didn’t. Fraudulent promissory notes, unethical and illegal sales practices and Ponzi schemes are other activities that could harm investors or get a professional into legal trouble.
Criminal charges arise
Someone accused of securities fraud may face a grand jury indictment. Although the person faces accusations of criminal behavior, he or she might not be guilty. A person could experience false accusations or law enforcement may assume illegal activity that results from negligence. For example, someone may not have intentionally provided false information when believing it is true.
Persons accused of securities crimes have rights and illegally obtained evidence may be suppressed. The suppression of critical evidence could destroy a prosecutor’s case. Police misconduct might also harm the prosecution.
