Securities fraud is a type of investment fraud that occurs when a person or business deceives investors about the value or nature of a security. This can be done through false or misleading statements, omissions of material information, or other manipulative practices. Securities fraud can have a devastating impact on investors, who can lose their life savings or retirement funds.
There are many different ways that securities fraud can be committed. Some examples include:
Making false or misleading statements about an investment: This could include inflating the value of a security, making promises about future performance that are not realistic, or omitting material information about the security, such as pending lawsuits or regulatory investigations.
Omitting material information about a security: This could include failing to disclose that the security is illiquid or that the issuer is facing financial problems.
Trading on inside information: This is when someone trades a security based on non-public information that is not available to the public.
Pump-and-dump schemes: This is when someone artificially inflates the price of a security through false or misleading statements and then sells their shares at a profit.
Ponzi schemes: This is a type of investment fraud in which investors are promised high returns with little or no risk. The fraudster uses money from new investors to pay off old investors, creating the illusion of success.
Some of the red flags that may indicate that you are a victim of securities fraud:
The investment opportunity seems too good to be true.
The promoter is making unrealistic promises about the investment.
The promoter is not willing to answer your questions about the investment.
The promoter is pressuring you to invest quickly.
You are not given all of the information you need to make an informed decision about the investment.
Some of the things you can do to protect yourself from securities fraud include:
Get everything in writing. Make sure you understand the terms of the investment before you invest.
Do your research before investing in any security. Make sure you understand the risks involved and that the investment is legitimate.
Be wary of promises of high returns with little or no risk.
If you have any concerns about an investment, contact the SEC or a private securities attorney.
If you believe that you have been the victim of securities fraud, it is important to contact an experienced securities attorney to discuss your legal options. Our law firm has extensive experience representing harmed investors.