Understand securities fraud and how to fight against accusations to you or your business.
The federal government, specifically the FBI and the U.S. Securities and Exchange Commission, have become much more vigilant in investigations of securities fraud and related criminal activities. As a result, an increasing number of high-profile securities fraud cases have been reported by news media. This includes the recent SEC complaint and federal indictment against Martin Shkreli, the former CEO of Retrophin, a pharmaceutical company.
What can brokers, financial advisors and others do to defend themselves against accusations of securities fraud? In these situations, it is critical to obtain the knowledge, resources and legal representation that will provide a strong defense against these formidable foes.
What constitutes securities fraud
Several illegal activities can be categorized as securities fraud, which can be defined as a deception of investors or manipulation of financial markets for personal gain. Specific activities can pertain to:
- Stock fraud
- Manipulation of stock prices
- High yield investments
- Broker embezzlement
- Ponzi or pyramid schemes
- Late day trading
- Insider trading
- Advanced fee schemes
- Fraudulent/illegitimate businesses
- False reporting or violations in reporting
- Conspiracy to commit fraud
A range of individuals and entities can be accused of securities fraud, including stock brokers and dealers, brokerage firms, financial advisors or analysts, corporations and even private investors who act on inside information.
How securities fraud is proven
To prove and individual or entity is guilty of securities fraud, the investor must show that the accused intentionally or recklessly misrepresented or omitted of factual information and, because the investor justifiably relied upon the information received, he or she suffered monetary damages. This can be information that a securities industry member knew or should have known was incorrect. Investors and their legal representatives need to prove this reliance on the misinformation through direct evidence, such as a prospectus statement or indirect evidence, through the fraud-on-the-market theory, fraud by omission or other tactics.
An experienced attorney offers the strongest defense
Securities fraud charges, either from an individual investor or class action lawsuit, have the potential to ruin promising careers of brokers, dealers, investors and other securities industry professionals. It also can tarnish the reputation of brokerage firms, businesses and other entities.
The best way to fight against fraud accusations is the work with an experienced and knowledgeable attorney. They can advocate on you or your company’s behalf to minimize the effects of a lawsuit and work vigorously to defend you against charges.