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Securities Fraud and Stock Fraud

Stock fraud typically occurs when the issuer of the security makes false statements about the company's status or fails to disclose important facts that may affect stock value. Due to this inaccurate information, investors are induced to purchase securities at artificially inflated prices. Securities lawyers can help consumers with cases involving investment securities and stock fraud.

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Examples of Investment Fraud by Public Companies

  • Misrepresentations - the company announces false statements or omits details of the company's financial status or sales performance with intent to attract and retain investors.

  • Violations of the Generally Accepted Accounting Principles (GAAP).

  • Illegal Insider Trading - employees or officers of the company trade stocks based on non-public information.

  • Violations of Employee Retirement Income Security Act (ERISA) - the company's trustees breach their fiduciary duty by allowing employees to trade stock at artificially inflated prices due to undisclosed problems.

  • Industries that have experienced stock fraud and securities fraud lawsuits in 2004-2005 include insurance, technology, communications, medical, and utilities.

Examples of Stock Broker Fraud

  • Misrepresentation/Omission - a broker intentionally misleads or does not disclose details and risk factors of a certain stock to the client.

  • Unsuitability - a broker recommends investments/stocks that are unsuited for the client's risk level and finances.

  • Churning - a broker conducting an unnecessary quantity of transactions which generate profit per transaction fees for the broker.

  • Overconcentration - a broker fails to diversify a client's investment portfolio.

  • Tipping - brokers and brokerage houses tipping clients to buy or sell securities based on non-public information. Also referred to as Illegal Insider Trading which includes brokers selling IPO, pre-public stocks to favored clients/friends.

Securities Fraud

stock fraud Investors especially small investors have lost millions upon millions of dollars due to stock fraud.

Companies that trade their stocks have legal responsibilities to those who buy their stock. Stock brokers also have legal obligations to the people they sell their stocks to. If either a company or a broker has committed fraud against you, you may be able to get some of your investment back.

Securities fraud class action lawsuits can be brought against the persons or entities that violated the Securities and Exchange Act of 1934 (the "Exchange Act") and/or the Securities Act of 1933 (the "Securities Act").

Claims can be brought against the issuer of the security, i.e. the public company, the company's officers, directors, or others involved in the violation, including stock brokers, underwriters, or auditors.


Securities Fraud Legal Help

If you or a loved one has suffered losses from securities fraud, please click the link below to send your complaint to a lawyer to evaluate your claim at no cost or obligation.


Posted on Oct-20-05
Updated on Sep-22-09

SECURITIES ARTICLES AND INTERVIEWS

Stock fraud criminal remains at large
Stock fraud criminal remains at large Saskatoon, SK: A criminal indictment has identified a former prison guard from Saskatchewan, Canada, as one of the six people accused of orchestrating a $60 million stock fraud scheme. [ Read More ]
Man reportedly got $939K in stock fraud scheme
Man reportedly got $939K in stock fraud scheme A 41-year-old man from Nevada has been charged in a civil action lawsuit citing stock fraud that reportedly made him more than $930,000. [ Read More ]
Former AIG CEO to Pay $15 Million to Settle Claims
Former AIG CEO to Pay $15 Million to Settle Claims New York, NY: The former chairman and chief executive officer of AIG will pay $15 million to settle claims he misled investors. Although the Securities and Exchange Commission (SEC) does not allege that Maurice "Hank" Greenberg was involved in securities fraud, it does allege that he and another AIG officer, Howard Smith, manipulated the company's earnings. Furthermore, the SEC said that Greenberg and Smith were "control persons," making them responsible for what occurred at AIG. [ Read More ]

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