Securities Fraud

As opposed to tucking it away in a savings account, many Americans choose to spend some of their money in the stock exchange and other securities. Investment has the potential to yield a gain, and very good investors can become very wealthy. At exactly the exact same time, however, investing in securities carries it has risks.

A lot of the danger comes from the changes of the market. Sometimes a stock’s worth crashes due to a natural disaster or other unexpected events. Suddenly the stock you purchased is nearly worthless. However, one of the many ways money can be dropped in the current market, some aren’t the product of chance. For one, it is not uncommon to hear of a financial professional being taken to court on charges of securities fraud. But just what is securities fraud?

Every time a person or organization decides to commit some of their assets in securities (stocks, commodities, etc), they are taking a risk. Among the main measures before investing in a company is collecting information on the company and its history. If they’re given false information, investors can be tricked into handing over their cash to what seems like an ordinary investment.

This offense of defrauding investors is called securities fraud. It may come in many forms, and may be committed by people in a lot of different positions. Sometimes this takes the form of stock brokers embezzling money from their customers, keeping some of it as their own and providing misleading information to the contrary.

Although most stock brokers aren’t defrauding their customers, there are different kinds of securities fraud connected with brokers also. The creation of “chop stocks” are just one example. Chop stocks are stocks in tiny companies which are intentionally inflated in price and then sold for a major profit. The way agents figure into this picture is that, because they frequently have substantial input in their customers’ trading decisions, some agents can be compensated to encourage their customers to invest in these stocks. This growth in demand then drives up the cost of the stock until the fraudulent stockholders sell for a profit.

In the event of publicly-traded companies (ones whose inventory you can purchase and sell), transactions made on information not released to the public are prohibited. This process is called insider trading, and is a sort of securities fraud. By way of instance, a person in a position of authority in such a business might have access to information that’s withheld from the general public. If such a person sells their inventory because personal, insider advice suggests the business’s stock will devalue, they could be accused of insider trading / securities fraud.

If you have been pushed to the brink of bankruptcy due to securities fraud, a Galvin Legal, PLLC Securities Fraud Attorney can help you.

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