It has often been said that money makes the world go round, and if you look at the world of finance, you could believe that to be true. After all, this is a place where fortunes are made and lost in the blink of an eye.
If you invest other people’s money, it’s easy to get caught up in the excitement of the risks you’re taking on their behalf; however, it’s essential to be aware of the ins and outs of security fraud to protect yourself and your investors from the potential consequences of conduct that could be perceived as deceitful practices.
Insider trading
One of the more well-known forms of securities fraud is insider trading. This occurs when someone learns material information about a company that the public isn’t aware of. An individual generally uses such information to trade stocks for personal gain.
Ponzi schemes
This type of investment fraud is named after Charles Ponzi. An individual promises high returns to investors but uses the money from later investors to pay returns to the earlier ones. This unsustainable practice eventually collapses, leaving many people with significant losses.
Market manipulation
Market manipulation occurs when the price of a stock is artificially inflated or deflated so an individual can profit from the subsequent price movement. This can involve spreading false rumors, engaging in wash trades (buying and selling to oneself) or cornering the market by controlling a large portion of available stock.
Misrepresentation or omissions
This occurs when companies or individuals provide false or misleading information regarding an investment or fail to disclose material information that could affect an investor’s decision.
An accusation of securities fraud is a serious matter and can potentially lead to severe penalties, including fines and imprisonment. If you have been accused of this kind of wrongdoing, the first thing you should do is work with someone who can help you navigate the complexities of the court system. They can protect your rights and work with you on crafting the strongest defense possible under the circumstances.
